In the financial markets, IPO is something highly talked about. If you go through financial news now and then, you might already be aware of the hype that surrounds IPO/Initial Public Offering in the market. But what is this hype all about?
Published on 11 July 2022
Well, an IPO investment has the potential to offer the investor with high returns by investing in a company the moment it debuts on the share market.
But the common question which might come to your mind is; how to apply for an IPO in India? The procedure is slightly different and may seem complicated if you are a first-time investor.
To apply for an IPO online, you need your mobile number linked to your bank account and need to fill an ASBA form. Let’s look at what ASBA is.
ASBA is the acronym of Application Supported by Blocked Amount. It is an efficient method for applying for IPOs in the country. So, when you invest in an IPO through ASBA, the investment funds get blocked in your account. And the money leaves your account only if you are allotted shares in the IPO. The best part is that you are also eligible to earn interest on the funds during this period. It is worth mentioning here that SEBI has made ASBA mandatory for investing in IPOs.
You can apply for IPOs online, and the process is quite simple. Here’s a step-by-step guide for the same:
Technically, if you are an adult and are competent enough to enter into a legal contract with an organization, you are eligible to invest in an IPO of any company. But, of course, you’ll need to have a few important documents like a PAN card duly issued by the Income Tax department.
Apart from this, you’ll need to have a Demat account as well. However, having a trading account isn’t mandatory in this case.
Brokers might advise you on opening a trading account for applying for an IPO. If you wish to sell the shares you get on the listing; you’ll need a trading account. Another important aspect to consider here is that when you invest in an IPO, you send an invitation to an offer, which does not amount to a real offer. And only when the IPO issuer offers you a share it will amount to an offer.
It is quite easy to apply for an IPO online if you keep the above-mentioned points in mind. So, the next time you find an interesting IPO option, go for it. And in case you are lucky, you might even get the desired number of shares billed directly to your Demat account.