Thursday, August 4, 2016

Frequently asked questions - IPOs /ASBA

Frequently asked questions - IPOs -/ASBA


Q1: what are different ways of filing application ?
A: You can do it either online through net banking or offline by submitting physical application

Q2: How many applications I can submit through online net banking from one bank account ?
A: You can submit maximum five applications from one saving bank account but it may vary from bank to bank with some banks having their own conditions.

Q3: Can I apply from current account ?
A: No. The application will not be processed by the bank

Q4: Can one apply from sweep in/out saving bank account ?
A: You can but the application amount should not involve sweeping.

Q5: What is important to see in bank balance at the time of applying ?
A: There should be a clear minimum cash balance equivalent to application amount in the bank.

Q6: Can I apply in the name of family members & friends from my saving bank account ?
A: Yes you can apply.

Q7: Can I apply more than one application in my name from different saving bank accounts in the same bank or different banks ?
A: No. If you do, then all your applications will be rejected.

Q8: What important things are to be seen in an application ?
A: It should be unique in three things below. These should not get repeated in any way.
1. Name of sole 1st applicant 
2. PAN no. 
3. DP ID + Client ID

Q9: If I have joint DP account whom I should consider for applicant ?
A: The application should be submitted for Ist name in the joint account with his/her corresponding details like PAN, DP etc.

Q10: Can I apply in the name of Minor or HUF ?

A: Yes you can apply as guardian of minor or Karta of HUF.

Q11: How many lots should I apply to get maximum allocation ?
A: If the issue is good, then it is bound to get over subscribed. In that case no matter how many lots you have applied, you will get maximum one lot that too in a lottery system. So you should not apply for more than one lot in a good issue. 
However, in an IPO which may turn out to be good or bad, where subscription is less than or equal to one time in retail category, then you will get as many lots as you have applied subject to Rs. 2 lakh limit.
In this case it is however a high risk proposition. You may lose a large amount of money. 
In nutshell, in order to be on safer side, it is advisable to always apply for one lot only in all cases. 

Q12: I had applied full lots upto Rs. 2 lakh but was not allotted any shares. There seems to be manipulations. Is there any way say change to a particular bank or DP, applying 1st day 1st hour etc. to get allotment ? 
A: No there is no such thing. As per new SEBI rules, whether you apply for one lot or full lots you stand equal chance to get only one lot in lottery system if retail category is subscribed more than one time. However, if it is subscribed less than one time, then you will get all the lots you have subscribed. So far lottery draw is concerned, it is drawn on a highly sophisticated super fast computer system where you cannot have any manipulations.

Q13: When I should expect allotment ?
A: After one week of closing date for subscription

Q14: When I should expect credit of shares in my DP ?
A: After 1 to 2 days of allotment

Q15: When I should expect release of funds in my bank ?
A: After 1 to 2 days of allotment

Q16: Will the funds get released automatically in my account ?
A: In most banks it is automatic however in some banks like HDFC, it has to be done yourself if you have applied online from their net banking.

Q17: When I should expect listing of shares ?
A: After 2 to 3 days of allotment

Q18: Upto what time I can apply for IPO ?
A: In online application it is 1 PM, 2PM or 3 PM. You have to check it for individual bank. Some banks also extend the time when there is huge subscription rush. In physical application through your broker, it can be 5 PM extendable as above. It is advisable not to wait for time extension.

Q19: Should I submit three bids for one lot each at three different bid prices in one application ?
A: This will not be beneficial. You should submit one bid only at cut-off price.

Q20: If there is a discount, at what price should I subscribe ?
A: In online bidding, the system will take into account discount offer automatically when you make bid at cut-off. In physical application, you will be asked to write bid price, discount & net price. You have then to take net price into account for calculation purpose.

Q21: I have not marked cut-off but has given bid price at upper band. Will it matter in any way ?
A: No. It does not matter

Q22: Why should I bid at cut-off
A: Because your application will always be considered for allotment whatever will be the final allotment price

Q23: If the price band is reduced but I have already applied in original band & amount stands blocked already, then what should I do ?
A: You need not do anything. If you get the allotment, then excess amount will be refunded to you after the allotment.

Q24: How can I Know allotment status ?
A: You can get it from the website of the registrar of the issue.

Q25: How can I know the subscription figure at any time ?
A: Check “NSE bid details” of the issue from Link 
Also check “BSE demand schedule” of the issue from Link
Add the two & you will get the figures at any time during the day. Total figures at the end of a day are however displayed directly on these sites at 5 PM.

Q26: What is meant by Kostak ?
A: Before an issue lists, brokers & individuals purchase the application from investors at a price which is called Kostak. Application is sold at Kostak irrespective of whether or not shares get allotted to that application. The transaction in this case is made at any time.

Q27: What is meant by GMP ?

A: Grey market premium (GMP) is the amount per share which an investor get from the broker or individual who buy them before listing of the shares which might get allotted in his application. The transaction in this case is made only after shares are allotted.

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