Basis of allotment in an Indian IPO

The basis of allotment is the SEBI-prescribed methodology by which the registrar to an issue of an Initial Public Offering decides which applicants receive how many shares, given that demand from each investor category routinely exceeds the shares reserved for that category. The basis of allotment is the procedural heart of the Indian IPO process. It converts an unprioritised pool of bids into a deterministic allotment file, governed by the SEBI (ICDR) Regulations, 2018 and a body of operational SEBI circulars dating to the introduction of book building in the early 1990s. The completed basis of allotment is published on the registrar website, the lead manager websites, and the stock exchange websites; it forms the legal record on which the depositories credit shares to allottees on T+2 and the listing approval is granted for T+3 trading.

This article documents the SEBI methodology category by category, the T+1 / T+2 / T+3 timeline introduced by the 9 August 2023 SEBI circular, the public allotment-status check facilities, and the common edge cases (heavy oversubscription, partial subscription, withdrawal). For readers placing a bid, the companion how-to guide is How to check IPO allotment status on Zerodha.

The T+3 timeline

Under the SEBI circular of 9 August 2023, effective 1 December 2023, the listing timeline was reduced from T+6 to T+3 working days. The timeline runs as follows, where T = bid closing day.

The pre-2023 T+6 regime added two days each at T+1, T+2 and T+3 stages. The compression to T+3 is widely credited as one of the most consequential operational reforms in Indian primary-market plumbing because it cut the working-capital lock-up for retail bidders from six to three working days and aligned the primary-market settlement cycle with the T+1 secondary-market cycle introduced in early 2023.

Role of the registrar

Every public issue in India appoints a Registrar to an Issue (RTI), a SEBI-registered Category I intermediary. The registrar’s responsibilities during the post-bid window are:

• Bid consolidation. Receives the consolidated bid file from both exchanges (NSE and BSE if dual-listed). Reconciles bid quantities and prices across the two exchanges.
• Third-party verification. Matches each application’s PAN against the demat PAN at the depository and against the bank account from which the UPI ID is mapped (or the bank ASBA SCSB). Silently rejects mismatches.
• Duplicate elimination. Identifies and rejects multiple applications under the same PAN across categories (the unique-PAN-per-issue-per-category rule).
• Multi-category cross-checking. Identifies applicants who applied in retail and also in employee or shareholder categories; allows the favoured-category application to stand and rejects the duplicate.
• Basis of allotment generation. Runs the SEBI-prescribed lottery or proportionate algorithm for each category, generates the allotment file, publishes the document on its own portal and on the lead manager portals.
• Depository instructions. Pushes the credit instructions to CDSL and NSDL on T+2.
• Allotment-status portal. Operates a public allotment-status portal (ipostatus.kfintech.com, linkintime.co.in, etc.) at which applicants can check their status by PAN, application number or demat ID.

Two registrars dominate the mainboard market: KFin Technologies (formerly Karvy Fintech) and Link Intime (Link Intime India Private Limited). The smaller mainboard and most SME issues are serviced by Bigshare Services, Cameo Corporate Services and Maashitla Securities.

Allotment methodology by category

The SEBI ICDR methodology differs across investor categories. The four principal categories each follow a different rule.

Retail individual investors — lottery in heavy oversubscription

The retail category, defined as natural-person bids of aggregate value up to ₹2,00,000, is the largest and most over-subscribed category in popular issues. The SEBI rule for retail is:

1. If the retail tranche is undersubscribed or fully subscribed, every applicant receives the shares they bid for, subject to the maximum-per-PAN rule.
2. If the retail tranche is oversubscribed, the registrar runs a random lottery to select which applicants receive the minimum lot (the smallest unit of allotment as specified in the prospectus, typically 13 to 50 shares depending on the price band). The lottery operates on the count of applications, not the value bid: applying for 13 lots versus 1 lot gives the same chance of allotment, because each application is treated as one entry in the lottery.
3. Successful applicants receive exactly the minimum lot; bids for more than one lot in an oversubscribed retail tranche are not honoured beyond the first lot.

The retail lottery produces the counter-intuitive result that, in a heavily oversubscribed issue, applying for one lot is the only strategy with a positive expected allotment. Applying for thirteen lots ties up thirteen times the working capital for the same allotment probability and the same single-lot allotment outcome. This rule is widely misunderstood and the practical implication is that aggregating bids across multiple family-member PANs (each their own application) maximises the household’s allotment probability.

Non-institutional investors — proportionate within sub-categories

The NII category, for bids above ₹2,00,000, is split into small NII (₹2,00,000 to ₹10,00,000) and big NII (above ₹10,00,000) sub-categories under SEBI’s December 2021 reform. Within each sub-category, allotment is proportionate to the bid size rather than by lottery: an applicant who bid for ten times the small-NII lot size receives ten times the allotment of an applicant who bid for the minimum, scaled by the overall sub-category subscription ratio. The split also means the small-NII and big-NII bidders compete only within their own sub-category, which protects small-NII allotment chances against the very large bids that dominated the pre-2021 NII pool.

Qualified institutional buyers — discretionary within disclosed framework

The QIB category, receiving up to 50% of the issue, is allocated at the discretion of the book running lead manager within the framework disclosed in the prospectus. The QIB allocation is constrained by the minimum-allocation floor (50% in profitable mainboard issues; 75% in compulsory-book-building issues for unprofitable issuers) and by the anchor sub-allocation rule. The discretionary element is bounded by SEBI’s requirement that the basis of allotment be disclosed to the public, including the named institutions and their allotted shares.

Anchor investors — fixed price, lock-in, pre-issue allotment

Anchor investors receive up to 60% of the QIB allocation at a fixed price set on the working day before public bid opening. Minimum bid is ₹10 crore for mainboard and ₹2 crore for SME issues. Allotment is decided by the lead manager from a pool of QIB applicants who submitted anchor bids. Allotted anchor shares are subject to a 30-day lock-in on 50% and a 90-day lock-in on the remaining 50%; anchor allotment, anchor pricing and anchor identity are publicly disclosed before the issue opens. The anchor allocation is widely read by retail investors as a signal of institutional appetite, although the academic evidence on whether anchor participation reliably predicts post-listing performance is mixed at best (see Bubna and Prabhala, 2014 on anchor signalling in Indian IPOs).

Reserved sub-categories — employees and shareholders

Where the issuer has carved out employee or existing-shareholder reservations, those sub-categories are allotted from a separate pool. Employee allotments typically receive a discount to the issue price (up to ₹2,00,000 per applicant, capped at ₹5,00,000 with discount). Shareholder reservations follow the same lottery-or-proportionate rule depending on subscription level in the sub-category.

How the allotment file is generated

The basis-of-allotment document published on the registrar website contains a category-by-category table showing:

• Category — Retail, Small NII, Big NII, QIB, Anchor, Employee, Shareholder (if reserved).
• Number of applicants — Total applications received in the category.
• Total shares applied for — Aggregate demand in the category.
• Subscription ratio — Shares applied for divided by shares allocated. A ratio of 1.0 indicates full subscription; higher values indicate oversubscription.
• Number of allottees — Number of applicants who received any shares.
• Allotment per applicant — For retail, this is the minimum lot in oversubscribed scenarios. For NII, this is a function of bid size and subscription ratio.
• Total shares allotted — Sum of allotments in the category.

The document is typically a 4 to 8 page PDF on the registrar website, named Basis of Allotment — [Issuer Name] and dated to T+1. It is the legal record of the allotment process.

Checking allotment status

Applicants can check their allotment status on T+1 once the registrar publishes the file feed. Multiple channels are available:

Registrar portal

The primary source. For KFin-handled issues, the URL is ipostatus.kfintech.com. For Link Intime issues, linkintime.co.in. The applicant enters their PAN, application number, or demat ID; the page returns the allotment status (Allotted / Not Allotted) and, if allotted, the number of shares.

Stock exchange portals

Both BSE and NSE expose allotment-status check facilities at bseindia.com/investors/appli_check.aspx and nseindia.com. The applicant enters the application number and PAN. These typically reflect the registrar feed within an hour of the registrar’s publication.

Broker interface

Brokers receive the allotment file feed and update the bid status in their client interface within an hour of public posting. On Zerodha Kite, the status is visible at Bids → Order history. The bid card updates from Mandate Accepted to Allotted (with the number of shares allotted) or Not Allotted.

Bank statement

The bank statement reflects allotment on T+1 / T+2 in two possible forms: either an IPO debit line for the allotted-share consideration alone, with the unused portion of the lien released as a separate entry; or a series of memo entries that net to the correct outcome. The exact format depends on the bank.

Demat credit and listing day

On T+2, the registrar’s depository instructions are processed by CDSL and NSDL. Allotted shares appear in the applicant’s demat holdings, visible on the Console holdings tab on Zerodha and the equivalent screens on other brokers. Until listing, the shares cannot be transferred or sold; they are merely a non-tradable holding.

On T+3 morning, the pre-open call auction runs from 9:00 AM to 9:45 AM IST, during which buy and sell orders are aggregated and an equilibrium opening price is discovered. The regular continuous trading session begins at 10:00 AM. For most mainboard listings, the issue is placed in trade-to-trade (T2T) settlement for the first ten trading days, meaning every transaction is settled by delivery rather than netted intraday; this is a SEBI measure to dampen speculation in newly listed scrips.

Common edge cases

Heavy oversubscription

In issues where the retail tranche is oversubscribed by twenty times or more, the lottery becomes the dominant filter. Notable recent examples include the MapMyIndia IPO of December 2021 (retail subscribed 39×), Tata Technologies of November 2023 (retail 16×) and Mamaearth / Honasa Consumer of November 2023 (retail 12×). In all of these, the bulk of retail applicants received no allotment.

Partial subscription

If a category is undersubscribed, the unfilled portion is spilled into other categories at the issuer’s discretion, subject to SEBI minimums. This is rare in practice for mainboard issues but happens occasionally in SME issues with weak demand.

Failed issue

If the overall issue is subscribed below 90%, the issue is mandatorily withdrawn under SEBI rules and all UPI mandates / bank blocks are released within one working day. Withdrawn issues are returned to private status and may be re-filed after a cooling-off period.

Issue withdrawal after closure

An issuer may withdraw the issue between bid closure and allotment, either on regulatory direction or commercial discretion. The most-discussed recent case is the Adani Enterprises FPO of January 2023, withdrawn the day after closing despite achieving full subscription. SEBI’s investor-protection guidelines require complete release of all UPI mandates and bank blocks within one working day of withdrawal.

Multiple PAN applications

The unique-PAN-per-issue-per-category rule is enforced rigorously. Multiple applications from the same PAN are flagged by the registrar’s third-party verification and all but one are rejected, with the rejected applications’ UPI mandates cancelled and blocks released. Applications by different family members under their own PAN, demat and bank are entirely legitimate.

References

1. SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, notified 11 September 2018.
2. SEBI Circular SEBI/HO/CFD/TPD1/CIR/P/2023/140 dated 9 August 2023, Reduction of timeline for listing of shares in Public Issue from existing T+6 days to T+3 days.
3. Schedule XIII of SEBI (ICDR) Regulations, Anchor Investor Allocation and Lock-in.
4. SEBI Circular SEBI/HO/CFD/DIL2/CIR/P/2021/2480/1/M dated 16 March 2021, Streamlining the process of IPOs with UPI in ASBA and redressal of investor grievances.
5. SEBI Circular dated December 2021, Reform of NII allocation: split into Small and Big NII sub-categories.
6. Bubna, Amit and Prabhala, Nagpurnanand, Anchor Investors in IPOs, Indian School of Business working paper, 2014.
7. NSDL operational circular, 2023, Reduction of timeline for listing of shares in Public Issue.
8. IPOs to compulsorily have T+3 listing from today, Business Today, 1 December 2023.

See also

• Initial Public Offering — the parent IPO topic
• Registrar to an Issue — the intermediary running the allotment
• KFin Technologies and Link Intime — the two dominant registrars
• Anchor investor — the lock-in QIB sub-category
• Retail individual investor, Non-Institutional Investor, Qualified Institutional Buyer
• IPO listing day — what happens on T+3
• UPI ASBA — the retail payment mechanism feeding the allotment
• How to check IPO allotment status on Zerodha — companion how-to

External links

• KFin Technologies IPO Status
• Link Intime IPO Status
• BSE IPO Allotment Check
• NSE IPO portal