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.
Example: You apply for 1 lot worth Rs 14,950. Within minutes you get a mandate request on your UPI app. You approve it with your PIN, and Rs 14,950 shows as blocked. After allotment, either Rs 14,950 is debited (shares allotted) or the block is removed (no allotment).