What to Do If You Don’t Get IPO Shares: Refunds and Next Steps

Applying for an Initial Public Offering (IPO) can be an exciting time for any investor. You have researched the company, feel good about its future, and have invested your money. But then, the IPO allotment status is announced, and you learn you didn’t get any shares. This can be disappointing, but it happens to a lot of people. This article explains why this occurs, what to do if you don't get shares, and how the refund process works.

Why Didn't I Get Any Shares? How the IPO Allotment Process Works

Getting shares in a popular IPO is not always certain. The two main reasons you might not get shares are oversubscription and mistakes on your application.

IPO Oversubscription: Too Much Demand

Often, many more people want to buy shares than the company is selling. This is called IPO oversubscription. When an IPO is oversubscribed, there are not enough shares for everyone who applied. To make it fair, companies often use a lottery system to give out shares to everyday investors. This means you might not get picked in the random lottery, even if you filled out your application correctly.

The IPO basis of allotment is the set of rules for how shares are given out fairly to different types of investors. These include everyday investors, wealthy individuals, and large companies. For very popular IPOs, a lottery is often the only fair way to give shares to everyday applicants.

Common Reasons Your IPO Application Might Be Rejected

Sometimes, the problem isn't bad luck but a simple mistake on your application. Getting an IPO application rejected message can be frustrating, but you can usually avoid it. Here are some common mistakes:

• Incorrect Information: Your application can be rejected if the name on your PAN card doesn't match your bank account, or if there are typos in your PAN or Demat account number.
• Multiple Applications from One PAN: You can only send in one application for each person (one PAN number) in an IPO. If you send more than one, they will reject all of your applications.
• Bidding Price Issues: In some IPOs, you bid a price for the shares. If your bid is lower than the final price the company sets, your application will not be considered.
• UPI Mandate Problems: Your application might be rejected if you forget to approve the UPI payment request in your app or enter the wrong PIN.

What Happens to My Money? How IPO Refunds Work

One of the biggest questions people ask is about their money. When you apply for an IPO, the money isn't taken from your account right away. Instead, the company blocks the amount using a system called ASBA (Application Supported by Blocked Amount). This means the money stays in your bank account and earns interest, but you cannot use it.

If you do not get any shares, the bank unblocks the full amount in your account. If you get some shares (a partial allotment), the bank only takes out the money for the shares you received. It then unblocks the rest of the money.

IPO Refund Time: When Will I Get My Money Back?

The IPO non-allotment refund process is usually very fast. According to the rules, companies must start the refund process within four business days after the IPO closes. You can typically expect the bank to unblock the ASBA blocked amount refund within 3 to 5 business days after they announce the results. Sometimes, it can take up to a week.

If you experience an IPO refund delay, first call your bank. Ask if they have received the message to unblock your money. If the bank has not received any instructions, you should then contact the IPO's registrar. If that doesn't solve the IPO refund issue, you can file a complaint with SEBI (Securities and Exchange Board of India).

How to Check Your IPO Allotment Status

It is easy to check IPO allotment status online. The results are usually shared with the public on the allotment date. You can typically find your status in two places:

1. The Registrar's Website: The IPO registrar (such as KFin Technologies or Link Intime) has a special page on their website for this. You will need your PAN card number, application number, or DP/Client ID to check.
2. Stock Exchange Websites: Both the BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) also have a way for you to check the allotment status on their official websites.

How Can I Improve My Chances of Getting Shares Next Time?

While there is no way to guarantee you'll get shares in a popular IPO, a few tips might help increase IPO allotment chances.

Tips on How to Apply for an IPO to Get Shares:

• Apply Through Multiple Demat Accounts: You can apply for an IPO from the Demat accounts of different family members. Just make sure each application uses a different PAN. This increases the total number of applications from your family, which raises the chance that at least one of you will be chosen.
• Apply for a Single Lot: In a very popular IPO, applying for just one, minimum lot can be a smart move. In the lottery, SEBI's rules treat every application from an everyday investor the same, no matter how many lots you apply for (up to ₹2,00,000).
• Bid at the Cut-Off Price: To prevent your application from being rejected for a low bid, it is a good idea for everyday investors to bid at the "cut-off" price. This tells the company you agree to buy the shares at the final price they decide on.
• Double-Check Your Application: Carefully check all your details, like your PAN, Demat account number, and UPI ID. This helps you avoid rejections caused by simple mistakes.
• Don't Wait Until the Last Minute: Applying early helps you avoid computer problems that can happen when too many people apply on the last day.

Your Next Steps

Not getting IPO shares is a normal part of investing. The most important thing is not to get discouraged. Your money will be returned to you quickly, and you can use that money for other investments. Use this as a chance to check your application process for any mistakes and think about the tips above for the next IPO. The stock market has many opportunities, and another great one could be coming soon.