What happens to the money if I don't get the allotment in an IPO?

Last Updated: 02-Dec-2022

Short Answer

While applying for an IPO a person either uses the UPI or ASBA facility for the payment and in both the process the total amount of money remains blocked by the bank under a "Mandate" until the allotment process is finalized hence the amount remains in the bank account of the investor and only gets debited if he/she receives the allotment of the shares.

Detailed Answer


An IPO is a process through which a private company becomes a public listed company by selling a part of its Equity or shares to the common public and in exchange raises some capital from the existing shareholders or for the company.

How do IPOs work?

Generally, companies do not directly get involved in selling their shares to the common public in exchange for their money. They appoint a team of professionals which include Underwriters, Registrars, and bankers to undertake the whole process for them. In this way, the Registrar appointed by the company takes care of all the allotment procedures and fund management.

Process of Payment for an IPO-

There are 2 main methods through which Investors can pay and apply for an IPO. They are -

  • UPI (Unified Payment Interface)
  • ASBA (Application Supported By Blocked Amount)

When an investor applies through either of these methods then the money is blocked by the partner bank. The money is under “Mandate” from the respective banks. This means that that specific amount of money cannot be accessed by the individual till the time the mandate is revoked. This mandate usually ends after a week of the IPO. Till then it remains blocked in the user's Bank account until the allotment process is finalized.

If the individual is allotted the shares then the amount is debited from his/her bank and the Shares are credited into their Demat account. On the other hand, if the investor is not allotted any shares then the mandate is revoked and the blocked money is unblocked.

IPO Allotment Process

As understood from the above process, when you apply for an IPO, the amount is Blocked in your Bank account through a Mandate that is revoked after the allotment process is completed.

Hence if one does not receive any allotment then the full amount is automatically unblocked and the investor gets full access to his/her money.

Whereas if they are allotted with the shares then the blocked money gets deducted from their bank account and in return the shares are credited to their Demat account. In this way, one can stay assured that their money is completely safe in their own Bank Account when applying for an IPO.

Tagged With: ipoipo allotmentshare allotmentinitial public offering
Categories: IPO Basics
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