IPO small HNI big HNI NII split IPO allotment draw of lots SEBI ICDR amendment

Small-HNI vs big-HNI: the NII split in an Indian IPO

From WebNotes, a public knowledge base. Last updated 21 June 2026. Reading time ~12 min.

Key facts

Small NII (sNII / small HNI)	Application of Rs 2,00,001 to Rs 10,00,000; receives one-third of the NII reservation
Big NII (bNII / big HNI)	Application above Rs 10,00,000; receives two-thirds of the NII reservation
NII reservation	Not less than 15 per cent of the net offer; split 5 per cent sNII and 10 per cent bNII
Reform	SEBI Circular dated 16 December 2021, effective 1 April 2022, on book-built issues
Allotment when oversubscribed	Minimum one lot to as many applicants as the tranche allows, selected by draw of lots, then pro-rata on the balance
Cut-off and modification	No cut-off-price bid; the bid can only be revised upward, never reduced or cancelled

Small HNI and big HNI are the two sub-categories into which the Securities and Exchange Board of India split the non-institutional investor (NII) tranche of an Indian mainboard IPO with effect from 1 April 2022. A small HNI, formally a small NII (sNII), applies for Rs 2,00,001 to Rs 10,00,000 and shares one-third of the NII reservation; a big HNI, a big NII (bNII), applies for more than Rs 10,00,000 and shares two-thirds. The reform, in SEBI Circular SEBI/HO/CFD/DIL2/CIR/P/2021/2480/1/M dated 16 December 2021, also replaced pure proportionate allotment with a draw of lots that guarantees a minimum lot, ending the leverage-driven subscription multiples that had reached 600 to 950 times in 2021 issues.

The split sits inside the non-institutional investor category, which is the bucket for any application above the Rs 2,00,000 retail ceiling that is not a qualified institutional buyer bid. The full set of IPO investor categories covers retail, NII, QIB, anchor, employee, and shareholder; this article is the deep dive into the two-way NII division, the reform that created it, and the allotment arithmetic a Zerodha HNI applicant should understand before placing a bid through Kite .

The reservation arithmetic

The NII category gets not less than 15 per cent of the net offer under Regulation 6(1) of the SEBI (ICDR) Regulations 2018 . Since 1 April 2022, that 15 per cent is divided in fixed proportions.

Sub-category	Application size	Share of NII pool	Share of net offer
Small NII (sNII)	Rs 2,00,001 to Rs 10,00,000	One-third	Around 5 per cent
Big NII (bNII)	Above Rs 10,00,000	Two-thirds	Around 10 per cent

The Rs 10,00,000 line is the only number that decides which sub-bucket an application falls into. An application of exactly Rs 10,00,000 or below is a small NII; one rupee above is a big NII. Both sub-categories still require the application to exceed the Rs 2,00,000 retail ceiling to be an NII bid at all. Funds blocked but never debited until allotment is the ASBA principle that applies to every IPO application, retail or HNI.

Why SEBI split the category in 2022

Before the reform, the entire NII tranche was allotted on a pure proportionate basis. An investor who applied for ten times the average bid received roughly ten times the average allotment. That formula created a direct incentive to apply for the largest quantity fundable, and HNIs responded by borrowing heavily, typically through non-banking financial companies offering short-term IPO funding, to inflate their applications. The result was extreme NII oversubscription. In 2021, Paras Defence saw its NII tranche subscribed about 950 times; Latent View, Tega Industries, and MTAR Technologies each drew NII subscription above 600 times. A small HNI applying with own funds in such an issue had almost no chance against a leveraged bidder applying for several crore.

SEBI’s response was twofold. It ring-fenced one-third of the NII pool for applications of Rs 2 to 10 lakh, so smaller HNIs no longer competed directly against eight-figure bids. And it changed the allotment method inside an oversubscribed sub-category from pure proportionate to a draw of lots with a guaranteed minimum lot, so that application size stopped buying a better chance of selection. Together these removed most of the economic logic for IPO leverage in the NII book, and NII subscription multiples in subsequent issues fell sharply from the 2021 extremes.

How allotment runs after the reform

The post-2022 method is a two-step process applied separately inside each sub-category.

First, the registrar determines how many applicants can each receive the minimum lot from the shares reserved for that sub-category. If the number of eligible applicants exceeds that count, a computerised draw of lots selects the winners, and each winner receives exactly the minimum lot applicable to the NII category. Selection is on the count of applications, not the value bid, so a Rs 2 lakh small-HNI application and a Rs 9 lakh small-HNI application carry the same probability of being drawn.

Second, if shares remain after every selected applicant has received the minimum lot, the balance is distributed pro-rata among the selected applicants by application size. This is the only stage at which a larger application yields more shares, and only for those already drawn. In a heavily oversubscribed sub-category, the minimum-lot draw exhausts the tranche and the pro-rata step does not occur, so almost every successful applicant receives exactly one minimum lot.

In practice the small-NII sub-category, with many applicants chasing a smaller pool, is the one most often resolved entirely by lottery. The big-NII sub-category, with fewer but larger applicants, more often reaches the pro-rata stage, so a big-HNI bid in a moderately subscribed issue can still pick up more than the minimum once selected. The basis of allotment the registrar publishes shows the exact maximum-allottee count and the lottery ratio per sub-category, and the broader mechanics sit in IPO oversubscription allotment .

The minimum-lot value, and why Rs 10 lakh is not the floor

A point that trips up applicants: the Rs 10 lakh line bifurcates the reservation, but it is not the minimum a big HNI must keep bidding. The minimum application size that keeps an application in the NII category at all is just above Rs 2,00,000 for both sub-categories. The Rs 10 lakh figure decides which pool the bid draws from. So an applicant who wants big-NII exposure has to apply for more than Rs 10,00,000 worth of lots to enter the bNII pool; once there, the minimum lot allotted on selection is the NII minimum lot, the same unit a small HNI receives, not a Rs 10 lakh block of shares.

Funding wall at Rs 5 lakh

The reform sits on top of a payment constraint that catches every HNI on a broker platform. SEBI capped UPI ASBA at Rs 5,00,000 per application from 1 May 2022, following the NPCI per-transaction limit increase from Rs 2 lakh to Rs 5 lakh in December 2021. A small-HNI application of up to Rs 5 lakh can therefore be funded by a UPI mandate on Kite . A small-HNI application above Rs 5 lakh, and every big-HNI application by definition, exceeds the UPI cap and must be funded through the investor’s own bank’s net-banking ASBA facility, which a broker like Zerodha cannot process because it is not a bank. This is why most big HNIs apply through bank ASBA directly, entering their Zerodha CDSL demat details into the bank’s IPO module rather than bidding on Kite. The operational detail is in how to apply in the HNI category on Zerodha and the common breakages in HNI IPO application failure reasons .

What stays the same across both sub-categories

Whether an application is sNII or bNII, the NII rules that distinguish the category from retail apply in full:

No cut-off price bid. The applicant must enter a price within the price band manually.
Upward-only revision. The bid can be increased while the issue is open but never reduced, and it cannot be cancelled or withdrawn, under the ICDR. An upward revision blocks the additional amount through a fresh mandate or ASBA lien, covered in how to modify an HNI IPO application .
An earlier cut-off. On Zerodha the HNI bidding window currently closes at 4 PM on the last day, ahead of the retail close, with bids after 3 PM submitted to the exchange on a best-effort basis.

The split does not reach SME IPOs

The NII bifurcation is a mainboard rule. An SME IPO on the NSE Emerge or BSE SME platform runs under Chapter IX of the ICDR with a single undivided NII bucket. SME lot values are much larger than mainboard lots, so the retail-versus-NII boundary at Rs 2,00,000 can be crossed by a single minimum-lot application; but once in the NII bucket, there is no small-versus-big sub-division. The mainboard versus SME IPO article sets out the platform-level differences.

External references

References

SEBI Circular SEBI/HO/CFD/DIL2/CIR/P/2021/2480/1/M dated 16 December 2021, Modifications to NII allotment methodology in book-built issues (effective for issues opening on or after 1 April 2022).
SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, Regulation 6(1) and Schedule XIII (NII reservation and sub-categorisation).
SEBI Circular SEBI/HO/CFD/DIL2/CIR/P/2022/45 dated 30 March 2022, increase of the UPI ASBA limit to Rs 5 lakh in public issues (effective 1 May 2022).
NPCI circular enhancing the per-transaction UPI limit for IPO ASBA from Rs 2 lakh to Rs 5 lakh, December 2021.
Zerodha support, applying for an IPO in the HNI category and HNI application modification (as accessed June 2026).

Frequently asked questions

What is the difference between small HNI and big HNI in an IPO?

A small HNI, or small NII, applies for Rs 2,00,001 to Rs 10,00,000 and shares one-third of the NII reservation. A big HNI, or big NII, applies above Rs 10,00,000 and shares two-thirds. SEBI created the split on 1 April 2022.

Why did SEBI split the NII category into two?

Before April 2022, NII allotment was purely proportionate, so bidders borrowed to apply for huge quantities, pushing NII subscription to 600 to 950 times in 2021 issues. The split with draw-of-lots gives smaller HNIs a fair chance and curbs the leverage arms race.

How much of an IPO is reserved for small and big HNIs?

The NII category gets not less than 15 per cent of the net offer. One-third, about 5 per cent of the issue, goes to small NIIs applying Rs 2 to 10 lakh. Two-thirds, about 10 per cent, goes to big NIIs applying above Rs 10 lakh.

How is allotment decided for HNIs now?

When a sub-category is oversubscribed, the registrar allots a minimum of one lot to as many applicants as the shares allow, chosen by draw of lots, then distributes any balance pro-rata. Application size no longer raises the odds of being selected in the lottery.

Does applying for more shares help in the big-HNI category?

Only above the minimum. A bigger application does not improve the chance of being picked in the draw of lots, but once selected, the balance after the minimum lot is shared pro-rata, so a larger bid can yield more shares in a lightly oversubscribed bNII tranche.

Does the small-HNI and big-HNI split apply to SME IPOs?

No. The NII bifurcation applies only to mainboard book-built issues. An SME IPO under Chapter IX of the SEBI ICDR Regulations keeps a single NII bucket, with allotment under the SME platform rules of the NSE Emerge or BSE SME segment.

Reviewed and published by

WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

Last reviewed: 21 June 2026
Conflicts of interest: WebNotes is independent. No relationship with any broker, registrar or bank named in this article.