IPO Guide

IPO Funds Unblocking

IPO Funds Unblocking is a crucial part of the IPO process, ensuring investors get back their blocked amounts in case of non-allotment or other reasons. The process typically takes 4 working days, and if there’s a delay, investors should contact the registrar or escalate the issue to SEBI.

What is IPO Funds Unblocking?

Investors initiating an Initial Public Offering (IPO) must block their bid amount within their bank accounts through the Application Supported by Blocked Amount (ASBA) mechanism. ASBA implements Application Supported by Blocked Amount procedures to block funds from investor bank accounts while guaranteeing limited usage of funds until share allotments occur.

The investor gets back their blocked funds when they fail to receive any share allotment or as a result of partial allotments. IPO Funds Unblocking describes the release of investor funds from their bank accounts through ASBA (Application Supported by Blocked Amount).

Reasons for IPO Funds Unblocking

Unblocking of funds happens because of several different situations.

1. Non-Allotment

The complete bid amount gets unblocked to the investor who does not receive allocated shares.
The additional funds beyond the particular allotment amount are the only ones eligible for release.

2. Non-receipt of Minimum Subscription

A non-acquired minimum subscription of 90% will result in the IPO cancellation with all investors obtaining fast returns on their investments.

3. Failure to Obtain Listing Approval

All funds must be unblocked when the stock exchange denies the listing application.

4. Failure to Allot to the Minimum Number of Allottees

According to SEBI regulations, an IPO needs at least 1,000 individuals to be officially allotted.
The condition requires full satisfaction for applicants to receive their contributions back once the provision is breached.

5. Failure to Allot 75% of Offer to QIBs

During the Book Building Process, a minimum of 75% of the issue needs to be distributed to Qualified Institutional Buyers (QIBs).
The IPO cancellation procedure results in fund unblocking since the allocation goal was not achieved.

IPO Funds Unblocking Timeline

Reason for Refund	Refund Initiation Time
Non-Allotment	Within 4 working days after issue closure
Failure to Obtain Listing Approval	Within 4 working days of rejection
Non-receipt of Minimum Subscription	Within 4 working days after issue closure
Failure to Allot to Minimum Number of Allottees	Within 4 working days after issue closure
Failure to Allot 75% of QIB Quota	Within 4 working days after issue closure

💡 Pro Tip: You can check the IPO refund status on the registrar’s website or via your bank statement.

How is the IPO Refund Process Initiated?

The registrar of the IPO is responsible for initiating the refund process. Here’s how it works:

The registrar finalizes the IPO allotment in consultation with the stock exchange.
The registrar informs banks to release funds for non-allotted or partially allotted investors.
Self-Certified Syndicate Banks (SCSBs) lift the lien on funds.
Refunds are credited via different modes of payment.

Modes of IPO Refund Initiation

Different refund methods are used based on the investor’s mode of application:

Refund Mode	How Refund is Processed	Applicable to
ASBA	Unblocking of funds in the bank account	Retail, Non-Institutional Investors (NIIs), QIBs
UPI	Revoking of UPI mandate	Retail Individual Investors (RIIs)
Electronic Refunds	Funds credited via NEFT, NACH, RTGS, Direct Credit	Anchor Investors

What to Do If Your IPO Funds Are Not Unblocked?

There are times when investors encounter delays concerning the release of their IPO refund funds. Here’s what you can do:

Start by checking your banking account for signs of fund unblocking.

Check whether money has actually been released by the financial institution.
The transaction label appears as either ASBA Refund or IPO Refund.

Contact the Registrar

An IPO's allocation and refund process belongs to the registrar's sphere of responsibility.
Check website updates of the registrar including refund status at their official platform.

You should submit your grievance to SEBI through its SEBI SCORES platform.

Using the SEBI SCORES website (https://scores.gov.in/) you may report your concern about delayed refunds because you did not receive your refund during the expected period.
Based on a delayed refund SEBI has the power to force the issuer to pay an annual 15 percent interest rate.

SEBI Investor Helpline: 📞 1800 266 7575 / 1800 22 7575

Glossary of Terms

Term	Meaning
ASBA	Application Supported by Blocked Amount - A process where funds remain in the investor’s account until IPO allotment.
NACH	National Automated Clearing House - Used for bulk payments like IPO refunds.
NEFT	National Electronic Funds Transfer - Electronic payment system used for refunds.
RTGS	Real-Time Gross Settlement - High-value, real-time fund transfers.
Direct Credit	The refund amount is directly transferred to the investor’s bank account.
QIB	Qualified Institutional Buyer - Large institutional investors like mutual funds.

FAQS

1. What does IPO fund unblocking mean?

Ans: IPO fund unblocking refers to the process of releasing the amount that was temporarily blocked in an investor’s bank account when they applied for an IPO. If shares are not allotted or partially allotted, the unutilized amount is refunded to the investor.

2. Why does my IPO application amount get blocked?

Ans: When you apply for an IPO through ASBA (Application Supported by Blocked Amount), your bank blocks the application amount to ensure that the funds are available for the allotment. If you receive the allotment, the required amount is debited; otherwise, the funds are released.

3. When will my IPO funds be unblocked?

Ans: As per SEBI regulations, IPO refunds or fund unblocking must be completed within four working days after the IPO closes. The timeline varies based on the IPO and is usually mentioned in the Red Herring Prospectus (RHP).

4. What are the reasons for IPO fund unblocking?

Ans: Your IPO application amount can be unblocked due to the following reasons:

Non-Allotment: If no shares are allotted, the entire amount is unblocked.
Partial Allotment: The excess amount (for non-allotted shares) is released.
IPO Cancellation: If the IPO is withdrawn or fails to get listing approval.
Non-Receipt of Minimum Subscription: If the IPO fails to get at least 90% subscription.
Failure to Meet SEBI Norms: If an IPO does not meet listing regulations, all funds are refunded.

5. How will I receive my IPO refund?

Ans: The refund is processed based on the payment mode you used while applying for the IPO:

ASBA (Net Banking/Demat): Funds are automatically unblocked by the bank.
UPI: The lien (hold) is revoked, and funds become available in your account.
Other Modes (Anchor Investors): Refunds are processed via NEFT, RTGS, or Direct Credit to the investor’s bank account.

6. My IPO funds are not unblocked. What should I do?

Ans: If your IPO funds are not unblocked after the stipulated time:

Check your bank statement to confirm the refund status.
Contact your bank or depository participant (DP).
Reach out to the Registrar of the IPO (details available in the IPO RHP).
If the issue persists, file a complaint with SEBI through SCORES (https://scores.gov.in).

7. What is the penalty if IPO refunds are delayed?

Ans: If the IPO refund process is delayed beyond the stipulated time, SEBI mandates the issuer to pay interest at 15% per annum on the refund amount.

8. Can I reapply for the IPO if my application is rejected?

Ans: No, once an IPO closes, you cannot reapply for the same IPO. However, you can use the refunded/unblocked amount to apply for other upcoming IPOs.

9. How can I track my IPO refund status?

Ans: You can track the refund status by:

Checking your bank account for fund unblocking.
Visiting the registrar’s website (e.g., Link Intime, KFintech) and entering your PAN or application number.
Checking your UPI app (if applied via UPI).

10. What happens if the IPO is withdrawn or fails to list?

Ans: If an IPO is withdrawn or fails to list due to regulatory issues, all investors receive a full refund of their application amount within four working days.