Reviewed on 24 Oct 2026 · Source: IPO Bulletin explainer; checked against SEBI ICDR Regulations 2018 (as amended) and offer-document practice
NII stands for Non-Institutional Investor. It covers individuals, HUFs, companies, trusts and other investors who bid for more than Rs 2 lakh in an IPO but are not Qualified Institutional Buyers. Because many high-net-worth individuals sit in this group, it is often called the HNI category. To be fairer to mid-sized bidders, SEBI split this category into two sub-categories: sNII, the small NII, for bids above Rs 2 lakh and up to Rs 10 lakh, and bNII, the big NII, for bids above Rs 10 lakh. One third of the NII portion is reserved for sNII and the remaining two thirds for bNII. Each sub-category is allotted separately, and the subscription of each is displayed on exchange data. The NII portion is usually not more than 15 percent of the net offer in a standard book-built issue. Allotment within this quota is by lot, so heavy oversubscription can mean many bids receive nothing. NII bids are commonly financed through UPI or ASBA, and some investors use short-term funding that is repaid after allotment, which influences how subscription looks on the last day.
Example: A net offer reserves 15 percent for NIIs. One third of that 15 percent goes to sNII bidders (Rs 2 lakh to Rs 10 lakh) and two thirds to bNII bidders (above Rs 10 lakh). If sNII is subscribed 30 times, a lot-based draw decides who gets shares.
Oversubscription happens when investors apply for more shares in an IPO than the company is offering. If a category is subscribed 5 times, applicants asked for five shares for each one available. When this occurs, not everyone can receive what they asked for, so allotment follows rules set by SEBI. In the retail category, a computerised lottery picks applicants who each get the minimum lot, which means many applicants receive nothing. In the QIB and NII categories, shares are allotted proportionately, so each bidder gets a smaller share of what it applied for, subject to minimum lot rules. Heavy oversubscription is read as a sign of strong interest, and it often lowers the retail allotment odds. A company can retain the oversubscription only up to the limits in the offer document; the greenshoe option, available in some issues, allows a stabilising agent to handle part of the excess demand after listing. Investors should remember that many bids are placed with borrowed money and are cancelled or reduced after allotment, so high figures do not always mean sustained demand. The reverse, undersubscription, means the issue is not fully taken up, and the company may fail to raise the minimum amount.
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.
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.
Worked example
A net offer reserves 15 percent for NIIs. One third of that 15 percent goes to sNII bidders (Rs 2 lakh to Rs 10 lakh) and two thirds to bNII bidders (above Rs 10 lakh). If sNII is subscribed 30 times, a lot-based draw decides who gets shares.
