How to Cancel Your IPO Application: A Step-by-Step Guide

Offering ordinary investors an opportunity to purchase shares at the ground level before the stock is listed on the exchange, IPO investments are sometimes considered as a portal to helping one to engage in the growth story of a firm.

What happens, though, should you have second thoughts following an IPO application? Cancelling an IPO bid is not as difficult as it might seem, depending on changes in market mood, financial priorities, or just a mistake in your application.

Usually made utilising trading platforms or bank portals, an IPO application uses the ASBA (Application Supported by Blocked Amount) system. This system guarantees that money stays frozen in your account till the allocation process is finished. Although the application process is simple, investors also depend equally on knowing how to withdraw or cancel their bid.

To guarantee a seamless experience, this article will lead you through the steps to properly cancel an IPO application, highlight important factors, and address the varying cancellation policies for different investor types.

What is an IPO application?

An IPO application is the procedure by which investors bid for a company about to go public. Applications can be sent offline by brokers, online using trading platforms or bank portals.

Most IPOs employ the ASBA system, in which case the applicant’s money is blocked in their bank account until shares are distributed.

Investors may decide to cancel their IPO applications due to changing market conditions, financial priorities, or application errors.

Also read: What is IPO? Understand the Initial Public Offer Process

Reasons to cancel an IPO application

Investors may find themselves rethinking their IPO applications for several reasons, ranging from market conditions to personal circumstances. Here are some common reasons why canceling an IPO application might become necessary:

Change in market sentiment: Market dynamics can shift quickly. Negative news on the company, such as bad financial situation, legal problems, or little demand for the IPO, may make investors rethink. Likewise, a slump in the larger market can inspire prudence.
Personal financial needs: Unexpected events define life, hence when an IPO application is filed, immediate financial needs could surface. Reallocating money takes front stage whether it’s for loan repayments, medical bills, or other unanticipated obligations.
Better investment opportunities: Sometimes investors find a more interesting possibility somewhere else. By cancelling an IPO application, they can focus their money on possibly better returns-oriented ventures.
Application errors: Errors in the application process, such as inappropriate quantities, inaccurate bidding amounts, or typographical mistakes, may nullify the bid. If at all possible, cancel and reapply properly instead of running the danger of rejection.
Eligibility issues: Should technical mistakes arise during the application or an investor’s account lacks enough cash at the time of allocation, the bid may not be regarded as valid. Canceling and resolving these issues promptly can prevent complications.

Rules for IPO cancellations for various investor types

Depending on your investor category, you may be able to withdraw your IPO application. The table below outlines the rules for each category:

Investor category	Description	Cancellation rules
Qualified institutional buyers (QIBs)	Large capital resources held by institutional investors.	Their IPO bids cannot be cancelled.
Non-institutional investors (NIIs)	High-net-worth individuals (HNIs) who invest over ₹2 lakh in the IPO.	They can alter their IPO bids but not cancel them. However, reducing the bid amount is not permitted.
Retail investors	Individual investors submitting applications for shares under ₹2 lakh.	Can cancel or modify their applications anytime before the subscription period ends.
Employees	Company employees participating in the IPO.	Can cancel or modify their applications before the IPO subscription closes.
Shareholders	Existing shareholders of the company applying for additional shares through the IPO.	Not specified; subject to the rules defined in the prospectus.

Step-by-step guide: How to cancel IPO application

Depending on the application method, ASBA or non-ASBA, investors who want to revoke their IPO application before the subscription period ends can do so. Here’s a simplified guide for each approach:

Cancelling an IPO application Through the ASBA option

Take these actions if you applied utilising the Application Supported by Blocked Amount method:

Log into the application where you made your bid or your net banking account.
Go to the part on the IPO and find the “order book.”
Locate the transaction ID linked to your IPO application.
Select the option to cancel or withdraw the bid.
Confirm your action to finalize the cancellation process.

Using the non-ASBA option to withdraw an IPO application

For applications made without using the ASBA method, follow these steps:

Log on to the platform or mobile app that your broking has given.
Look for the application you wish to withdraw in the IPO part.
Choose the “cancel” or “withdraw” option next to your bid.
Confirm your selection and revoke the UPI mandate associated with the application to complete the process.

Must read: Everything You Need to Know About ASBA

Key points to remember before canceling an IPO application

Cancelling an IPO filing calls for careful attention to some crucial elements to guarantee a seamless flow. The following might assist you in remembering:

Cancellation deadline: Your IPO application can be cancelled only before the closing date of the issuance. Once the IPO subscription period ends, modifications or cancellations are no longer allowed.
ASBA mandate: If you applied using the ASBA process, ensure the bank’s mandate blocking the funds is removed during cancellation. Failure to do so may keep your funds blocked unnecessarily.
Refund timeline: After a successful cancellation, funds tied to the IPO application are usually unblocked within a few working days. See your broker or bank to find the precise schedule.
Platform-specific guidelines: Depending on the trading platform, broker, or bank you applied through, the cancellation procedure could vary somewhat. To prevent delays or mistakes, adhere to the platform-specific instructions.

Bottomline

Whether it’s due to shifting market sentiment or personal priorities, canceling an IPO application doesn’t have to be complicated. With the right steps, you can easily adjust your financial plan with confidence.

FAQs

Can I cancel my IPO application?

You can indeed revoke your IPO application, but this relies on your investor type. Before the subscription period concludes, employees and retail investors can revoke or change their applications. Non-institutional investors can change but cannot undo their offers. Bid cancellation is not possible for qualified institutional buyers. For comprehensive information, always refer to the particular policies in the IPO prospectus.

Can I cancel an IPO application after accepting a mandate and apply again?

Yes, once you have accepted a mandate, you can withdraw an IPO application and reapply. Before the subscription period concludes, employees and retail investors can revoke or change their applications. Non-institutional investors can change but cannot undo their offers. Bid cancellation is not possible for qualified institutional buyers. For comprehensive information, always refer to the particular policies in the IPO prospectus.

How do I exit an IPO?

You must cancel your application before the subscription term runs if you want to leave an IPO. Through their trading platform or bank site, employees and retail investors can cancel or change their applications. Non-institutional investors can change but cannot undo their offers. Bid cancellation is not possible for qualified institutional buyers. For comprehensive information, always refer to the particular policies in the IPO prospectus.

Is IPO refundable?

Yes, in case the shares are not assigned to you, IPO applications are refundable. Your bank account will show a blocked amount, which will be freed and the money will be accessible. Should you revoke your application before the subscription period finishes, the blocked sum will also be published. For comprehensive information, always refer to the particular guidelines in the IPO prospectus.

Can I sell IPO shares immediately?

Yes, you are free to sell IPO shares right away following stock market listing. You can order a sale once the stock begins trading and the shares are credited to your demat account using your trading platform. Still, before deciding, one should take into account possible price swings and state of the market. For thorough information, always review the particular guidelines in the IPO prospectus.

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