How to Withdraw an IPO Application: A Step-by-Step Guide for Investors

An Initial Public Offering (IPO) gives people the opportunity to directly and actively participate in the common market with stocks of a particular firm that have been transferred from private to public domain. However, there are some cases in which an investor may wish to withdraw the application filed with the SEBI. Investors need to have some knowledge of the procedures and regulations for withdrawing an IPO application.

Understanding IPO Application Withdrawal

An IPO application can be withdrawn during the subscription period, which typically spans from the opening to the closing date. Retail investors, employees, and shareholders with bid values not exceeding ₹2 lakhs can withdraw their applications during this period. Nonetheless, the bidders in the categories of NII and QIB mostly do not have the freedom of bidding withdrawal or bid cancellation once they have decided.

Methods to Withdraw an IPO Application

The process for withdrawing an IPO application varies depending on the method used to apply:

1. Through ASBA (Application Supported by Blocked Amount):

• During the Bidding Period:
  • Visit the bank’s net banking portal or mobile application by which the IPO application has been filed.
  • Move to the IPO section and search for the ‘Order Book’ button or any same name.
  • Locate the IPO application you wish to withdraw and select the ‘Withdraw’ or ‘Cancel’ button.
  • If the user has made the withdrawal request, then review and confirm the request.
• After the Bidding Period:
  • In the case of a written application, the applicant must submit a written request to the registrar of the issue before the finalization of the basis of allotment.
  • The registrar will then forward the request, and the Self-Certified Syndicate Bank (SCSB) will unblock the amount of money set aside for the application.

1. Through UPI (Unified Payments Interface):

• Access a trading platform or bank application through which the IPO application was made.
• In the IPO section, locate the proper application.
• Choose the ‘Withdraw’ or ‘Cancel’ button and confirm the choice.
• Reject the UPI mandate linked to the application to ensure the funds are unblocked.

Key Considerations

• Timing: Such a request ought to be made before the finalization of the basis of allotment. Any further request is likely not to be addressed.
• Broker/Bank Policies: The method and time of withdrawal may also differ from one broker to another or depending on the specific bank the broker is using. Some institutions may have earlier cut-off times on the issue closing date. It is advisable to consult your broker or bank for specific guidance.
• Investor Category Restrictions: While retail investors can withdraw their applications within the subscription period, NIIs and QIBs typically cannot cancel or reduce their bids once submitted. They may only be able to increase their bid size if they want.

Post-Issue Closure Withdrawals

Occasionally, the investors that submitted IPO applications during the issue may want to withdraw their applications after the books have closed and before the allotment is made. As per SEBI regulations, retail investors can approach the registrar of the issue with a withdrawal request during such a period. A request must include details such as the application number, the applicant’s name as provided in the application, and the applicant’s signature. The registrar will then forward this request to the State Central Standing Bureau (SCSB) to unblock the application money.

Implications of Withdrawal

• Fund Unblocking: Following withdrawal, the amount of money that was locked in the IPO application will be credited back into the investor’s bank account.
• No Allotment: This option means that the investor’s name will not be on the list to receive any shares in the particular IPO.
• Future Applications: Withdrawing an IPO application does not prevent an investor from participating in future IPOs. Investors are welcome to apply for other offerings according to their investment plan.

Conclusion

Moreover, withdrawing an IPO application is not very complex if it is carried out within the aforesaid time horizons and accompanied by necessary formalities as outlined by the respective banks or brokers for such arrangements. This indicates that investors should be aware of the policies of their intermediaries and ensure they adhere to the stipulated timelines when withdrawing their applications.