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.
Example: You place a bid for 2 lots of 100 shares at the cap price of Rs 150. Rs 30,000 is blocked. If the final price is Rs 145, Rs 29,000 is debited on allotment and Rs 1,000 is released.