Investors tend to change their minds once they have applied to an IPO. You may observe that there is a high demand and may want to raise your quantity of bids. You may also decide that the IPO is not right for you and would like to pull out. The stock market allows you to make these changes through modification and cancellation. This facility assists you in managing your investments during the three-day bidding period.
Rules for IPO Cancellation and Modification
The rules of altering your bid will vary depending on the nature of the IPO and the category you belong to as an investor. Mainboard IPO and SME IPO have different guidelines.
Mainboard IPOs
Large companies issue Mainboard IPOs. The regulations in this case are quite specific.
- Retail Individual Investors (RII): Cancellation of your bid can be done at any time the IPO is open. You may also increase or reduce your bid size.
- QIBs and NIIs: These large investors are not able to withdraw their bids after placing them. They can only adjust their bids to a greater amount. They cannot decrease the bid quantity or price.
- Employees and Shareholders: You have the chance to cancel or revise your bid in case it is under 2 lakhs in total size.
SME IPOs
Small and medium enterprises issue SME IPOs. The rules for these issues can vary.
- Many SME IPOs follow the same rules as Mainboard issues.
- Some SME IPOs do not allow any cancellations.
- Some issues will only allow you to revise your bid upwards.
- You must always check the Red Herring Prospectus (RHP) for the exact rules of an SME IPO.
Modification and Cancellation Rules
| Investor Category | Can Cancel Bid? | Can Modify (Increase)? | Can Modify (Decrease)? |
|---|
| Retail Investor | Yes | Yes | Yes |
| QIB | No | Yes | No |
| NII | No | Yes | No |
| Employee (< 2L) | Yes | Yes | Yes |
| Shareholder (< 2L) | Yes | Yes | Yes |
How to Cancel Your IPO Application
You can withdraw your bid using the online or offline method. You will only be able to do it once your order reaches the Exchange.
Steps for Online Cancellation
This is the quickest method of withdrawing from the IPO.
- Log in to your net banking portals or broker application.
- Navigate to the IPO section.
- Choose the IPO application that you wish to remove.
- Click on the ‘Cancel Bid’ or ‘Withdraw Application’ button.
- Confirm the request on the screen.
- Cancel your UPI mandate in your payment application in case the system asks.
Steps for Offline Cancellation
- Write a formal cancellation letter.
- Include your IPO application number and PAN.
- Mention your name and application information.
- Sign the letter.
- Submit this letter to the office where you gave your IPO application.
How to Modify Your IPO Application
Modification refers to changing the price or the quantity of shares in the bid.
Online Modification Process
- Log in to your trading platform or net banking.
- Find the applied IPO in the investment section.
- Click on the option of ‘Modify Bid’.
- Enter the new quantity or the new price.
- Click on ‘Update’ or ‘Confirm’.
- Approve the new UPI mandate on your phone. With ASBA, the bank will block more money for a higher bid. In case you lower your bid, the bank will release the additional money upon the allotment.
Offline Modification Process
- Get the IPO Revision Form from your broker or on the exchange website.
- Enter your personal information, such as PAN and DP ID.
- Write the old bid data and the new updated bid information.
- Give your UPI ID or ASBA account number.
- Add your signature and hand it over to your intermediary.
Important Timings for Changes : You can only modify or cancel during the official bidding window.
- Normal working hours: 10 AM on the first day to 5 PM on the last day.
- Broker Deadlines: Each broker, such as Zerodha, has its specific timings. They may permit the changes between 10 am and 4.30 pm.
- Last Day Rush: Banks usually close the window on the last day. You must confirm with your bank not to miss the deadline.
Common Reasons for IPO Application Rejection
Even if you do not cancel your application, it may be rejected. The mistakes in the application or amendment process often lead to rejection.
- Price Issues: Bid not in the official price band.
- Wrong Details: Entering an inaccurate UPI ID or a wrong ASBA account number.
- Third-Party Payments: With the help of a bank account that does not belong to the applicant.
- PAN Mismatch: Use of the same PAN for multiple applications within the same category.
- Inadequate Funds: The unavailability of adequate funds in the bank account to fund the block.
- SME Errors: SMEs making a bid at the cut-off price in an SME IPO.
What Happens if a Rejected Application Blocks Your Money?
In some cases, an application is rejected, but the money stays blocked. This may occur as a result of a technical failure between the exchange and the bank.
- The money is generally released by the bank after the UPI mandate expires.
- To speed up the refund, you can call your bank or the registrar.
- Mostly, the funds are released after the allotment date.
Glossary for Investors
- UPI Handle: This is the part of your UPI ID after the ‘@’ symbol. It is the bank or the application that handles your payment. The examples are: @paytm or @okicici.
- DP ID: It is the Depository Participant identification number. Your full demat account number contains this ID. It helps the exchange to determine where to send your shares.