How To Apply for IPO through SBI Bank: Is it easy or complex?

The Internet has made it very simple for retail investors to participate in IPOs since the whole process can be carried out in just a few clicks. Initial Public Offering (IPO) process is carried out when a previously unlisted company intends to sell either new or existing securities to the public for the first time. In this post we will see how you can Apply for IPO through SBI banks pretty easily.

After the IPO process, the issuing company becomes a ‘publicly listed company’ on a recognized stock exchange.

Thus, a company is said to be “going public” when they begin the IPO process. It is also possible for a company that is already listed to start to offer a new issue of shares. These shares are called ‘new issues’.

This article goes over all the details that will help you apply for an IPO via a respected State Certified State Bank (SCSB) like the State Bank of India.

To apply for an IPO, you must first know about ASBA.

What is ASBA?

ASBA stands for ‘Application Supported by Blocked Amount’. In essence, ASBA is an application that has the authorization to block funds in a bank account. This functionality is used to set aside the money being used to apply for an IPO.

The reason why ASBA has become so mainstream is because of its ingenuity.

When an investor applies for an IPO through ASBA, the amount debits from the account only if the application is eligible for an allotment. After being selected, the basis of allotment is finalized.

Until that point, it is just marked as the lien. If the application is rejected, the funds stay where they are.

The Securities and Exchanges Board of India (SEBI) declared that with effect from 1^st January 2016, the applications for all Public Issues of equity shares must be made through ASBA only.

What is an SCSB and how it concerns you:

SCSB stands for State Certified Syndicate Bank.

Only these banks have the authorization to use the ASBA service for their clients.

At first glance, it looks like the service is limited to those who have accounts with these banks. However, this seclusion of services makes life much easier for an investor.

It is because, throughout the application process for the Public Offering, the interest, due to be gained from the amount, is not lost.

If the application is accepted, the interest over the week(s) taken for processing of the application is automatically debited.

If the application is rejected, there is no loss of interest as such.

This clause, off course, only applies if the applicant is using an interest-bearing account – a Savings Account or a Current Account (other than Overdraft).

Other than State Bank of India, some popular SCSBs include

Axis Bank
HDFC Bank Ltd.
ICICI Bank Ltd.
Yes Bank Ltd.

Advantages of ASBA:

Utilizing ASBA for applying for IPOs has the following advantages:

The applicant does not need to supply a cheque to pay for the application. Instead, the investor submits a request via the SCSBs, which automatically authorizes the use of funds in the applicant’s bank account for the application.
Regardless of the eventual acceptance or rejection of the application, the investor continues to earn interest on the application money. It happens only if the amount is held in an interest-bearing account since the funds remain with the bank.
There is no hassle or fuss for the investor on refunds. It is because, in the ASBA system, only the required amount is marked as a lien for allotment of securities. Moreover, when the application is accepted, only then the funds are taken from the bank account.

Requirements:

The applicant must be a resident of India, over 18 years of age.
Also, the applicant must have an Internet-enabled account with the State Bank of India along with transaction rights.
Having a Demat account with any Depository Participants (DPs) are also required. It may not necessarily be with SBI.
A valid Permanent Account Number (PAN).
The applicant must only apply at the cut-off price, which is the higher of the bid price.

The details of the Demat account like the name of the Depository Participants and knowing whether the Demat account is with NSDL or CDSL, among other details, is critical.

Only the following categories of people can apply:

Through Retail Internet Banking:

Retail Individual Investors
Employees and
Shareholders

Through Corporate Internet Banking:

FIIs other than Individuals or Corporate
Mutual Funds
Insurance Company
Banks and FIs
Other QIBs
Bodies Corporate
NII (others)

Apply for IPO through SBI : Application Process

Go to the SBI website on your web browser.
Login via the ‘Personal Banking’ section.
Navigate to the e-Services Tab.
Under this tab, find and click on the ‘Demat and ASBA Services’ menu on the left. On this page, there are three sections – Demat Services, ASBA Services, and Other Services.
Under ‘ASBA Services’, click on ‘IPO Equity’, then click ‘Accept’ after you’ve read the terms and conditions.
The IPO Equity page will provide you with a list of companies that are issuing IPOs and the opening and closing dates of the bidding. Pick the IPO you want to apply for and click on ‘Accept’.
The next page you see will comprise of all the details of the IPO – like the minimum bidding quantity and price of each share. There will also be a form where you need to enter applicant details.

Firstly, you need to enter the category of the investor(s) – Individual, Employees or Shareholders.

Then, you must enter the name(s) of the applicants. Once the applicant enters his or her name, the other details like PAN and depository names are automatically filled.

Finally, IPO details like the quantity you wish to buy and the bidding price must be entered

There is also a ‘cut-off’ price option for retail investors, where the exact amount of investment is not definite.
Instead, the company provides a price range, and the investors must bid within that range. Checking the ‘cut-off’ option implies that you accept the allotment of shares at a price decided by the company. This saves you from bidding and also ensures that you don’t lose allotment due to a lower bidding price.

Post filling up all the details, click ‘Submit’.

You will then be taken to the ‘IPO Confirmation Page’. This page consists of the list of IPOs you have successfully applied for.

Finally, look for the name of the company you applied for, the lien amount marked, and the status of said amount.

If all the details look OK, then you can be assured that your application was a success.

However, if you accidentally entered any misinformation, there is no need to worry. SBI provides an option for customers to correct any wrong details.

Editing IPO application:

Go to the SBI web
site on your web browser.
Login via the ‘Personal Banking’ section.
Navigate to the e-Services Tab.
Under this tab, find and click on the ‘Demat and ASBA Services’ menu on the left.
Now, under ‘ASBA Services’ click on ‘IPO Equity’.
On the IPO Equity page, you will find an ‘Edit IPO’ button. Click on it.
You will be directed towards a page where you’ll find all the IPOs you have applied for. Find and select the IPO you wish to edit.
Correct the details, then click ‘Submit’.

State Bank of India also gives you the flexibility to add new applicants for the IPO after the initial application.

Add a New Applicant:

Go to the SBI website on your web browser.
Login via the ‘Personal Banking’ section.
Navigate to the ‘Profile’ tab.
In the Profile section, you will find a ‘Manage IPO applicant’ option. On clicking it, you will be asked to enter your online banking password a second time.
On the next screen, you can enter all the required details – the name of the new applicant, their PAN, and their Depositories.
After all the details are entered, click on ‘Add’.
The next page will show you all the details you have entered. After verifying that they are right, click ‘Confirm’.

You can check the status of your application for the IPO at any time.

Check the status of the IPO:

Go to the SBI website on your web browser.
Login via the ‘Personal Banking’ section.
Navigate to the e-Services Tab.
Under this tab, find and click on the ‘Demat and ASBA Services’ menu on the left.
Now, under ‘ASBA Services’ click on ‘IPO Equity’.
On the IPO Equity menu, find and click on the ‘IPO History’ button.
This page displays the reference number, the name of the company, the date of application and most importantly, the lien amount marked and it’s status.

Benefits When You Apply for IPO through SBI

The whole process of allocating funds is simplified with their modern and crisp interface.
There is no need for visiting your designated branch to submit an application form. You can do it from the comfort of your home.
All the rules of ASBA are respected, and the applicant’s funds are moved only at the time of allotment, granted the allotment is successful. Until then, the amount remains in the applicant’s bank account.
Also, there is no loss in interest during the IPO processing period.

Most critical details, like:

The floor price
The cap price
Minimum quantity needed to be purchased.
Multiples applicable
Maximum retail value of the share

are decided and finalized by the company that is issuing the IPO. Furthermore, the SCSBs have no say or control over such matters.

The process of applying through ASBA is mainly done online. However, investors have other options with SBI. They can:

Submit a physical application to their intermediary or broker. The ASBA forms are then submitted to SBI, and the specified amount is marked to be on hold from the deposit account.
The investors can also visit the nearest branch, and the process is completed in a matter of minutes.

Some other conditions that investors need to have in mind are:

Investors can only apply for a maximum of three bids per application. However, only one bid can be made if the investor chooses to apply at the cut-off price.
An IPO can only be applied for once with one PAN.
An IPO can only be applied for five times maximum from one account (in different names).
Retail Individual Investors are permitted to withdraw are revise their bids at any time during the bidding stage. It applies to investors applying up to Rs. 200,000.
If the RTA rejects the application, the bid value, which was blocked by SBI, will be released within 24 hours.

IPOs are an exciting financial instrument that allows for the growth of companies and investors alike. Initial Public Offerings can yield high returns. However, there is also considerable risk.

To know if you’re making the right move by investing in an IPO, consider the size of the offering, and check whether there is high demand.

These pointers should be a good enough indicator, and you’ll be able to spot a bad deal instantly.

Having a cautious outlook is the best tactic. Ignoring most of the publicity and hype created by media outlets for companies is crucial since it confuses the investors and leads to unclear decisions.

Applying for IPOs, however, is the easy part. It can be done right from your home within minutes.

With the SEBI regulating all such transactions along with the knowledge of utilizing a prestigious trusted Self-Certified Syndicate Bank like State Bank of India, investors do not need to worry about the security and transactional ability of their money.