Reviewed on 24 Oct 2026 · Source: IPO Bulletin explainer; checked against SEBI ICDR Regulations 2018 (as amended)
ASBA stands for Application Supported by Blocked Amount. It is the method every IPO investor in India uses to pay for an application. Instead of sending a cheque or a demand draft to the company, you authorise your own bank to block the application amount in your savings account. The money stays with you, keeps earning savings interest, and is debited only if you are allotted shares. If you get no shares, or fewer than you applied for, the bank simply releases the blocked amount. You can use ASBA through your bank’s net banking, through a broker, or through the UPI mandate option, which sends a request to your UPI app that you approve to place the block. ASBA removed the old problem of money being stuck with the company for weeks and of refund cheques going missing. It also means your funds are protected until the exact moment shares are allotted. Make sure the account you name has enough balance for the full application, or the bid will be rejected.
Example: You apply for one lot worth Rs 15,000 with ASBA. The bank blocks Rs 15,000 but does not debit it. If you receive the shares, Rs 15,000 is debited at allotment. If not, the block is lifted and the money is fully free again.
A UPI mandate is the payment request that blocks money in your bank account when you apply for an IPO using UPI. After you enter your UPI ID in your broker's app or on the exchange platform, the exchange sends a mandate request to your UPI app. You must approve it by entering your UPI PIN before the deadline, which is normally the end of the bidding window on the closing day. Approving the mandate does not take the money out of your account; it only places a hold on the amount, so the funds keep earning interest in a savings account until allotment is finalised. If you receive shares, the amount for them is debited and the balance is released. If you do not, the whole block is lifted. A mandate you forget to approve means the application is not valid and cannot be allotted. The maximum value that can be blocked through UPI for an IPO is Rs 5 lakh in the case of certain retail and small NII applications. Always use your own UPI ID that is linked to the same bank account as your demat PAN details.
A bid is an investor's offer to buy a specified number of shares in an IPO at a price within the announced price band. In a book-built issue, you submit a bid through your broker, your bank's net banking or a UPI-enabled app, stating the quantity in lots and either a specific price or the cut-off option. A bid can be revised upward or downward, or cancelled, while the issue is open, and a revised bid replaces the earlier one. Each bid is recorded in the exchange's order book, and the totals across all prices form the book from which the final price is discovered. The amount blocked for a bid is the number of shares multiplied by the highest price at which you bid, so bidding at the cap blocks the largest sum. If the final price is lower, the extra is released. Only one bid per category per PAN is generally allowed, with bids from the same PAN in the same category treated as duplicates. Bids placed by retail investors on the last day are accepted until the exchange cut-off, typically 5 pm, though UPI approval for the mandate needs to be completed within the same window.
Allotment is the step after an IPO closes in which the company decides who receives shares and how many. Once bidding ends, the registrar prepares the basis of allotment, which explains how the shares were shared between categories and applicants. If an issue is not oversubscribed in a category, most valid applicants get what they asked for. If it is oversubscribed, shares are rationed. In the retail category, successful applicants are chosen by a computerised lottery and each winner usually receives one lot, because the demand is far larger than the supply. Larger categories receive shares in proportion to their bids. After allotment, shares are credited to the demat accounts of successful applicants, and money for unsuccessful applications is released from the ASBA block. SEBI requires the whole process, from issue close to listing, to be completed within three working days. You can check your allotment status on the registrar's website using your application number, PAN or demat details, and on the exchange page for the issue.
Worked example
You apply for one lot worth Rs 15,000 with ASBA. The bank blocks Rs 15,000 but does not debit it. If you receive the shares, Rs 15,000 is debited at allotment. If not, the block is lifted and the money is fully free again.
