Investments
How to cancel an IPO application?
Initial Public Offerings (IPOs) represent significant investment opportunities, but circumstances might necessitate cancelling your application. Whether due to market volatility, valuation concerns, or personal financial circumstances, knowing how to cancel an IPO application is essential knowledge for every investor.
If you've found yourself wondering, "How can I cancel my IPO application?" you're in the right place. Let's find out how to cancel an IPO application.
What is the withdrawal of an IPO application?
Withdrawing an IPO application means taking back your decision to invest in a company’s shares before they are given to you. When you apply for an IPO, the money you bid is not taken from your bank account straight away; it is simply blocked using a system called ASBA (application supported by blocked amount).
If you change your mind, you can cancel the application, and the blocked money will be released back to your account. However, you can only do this before the IPO closes. Once the last date to apply is over, you cannot withdraw. Many investors choose to cancel their application if the market mood turns negative or if the expected profit (shown by the grey market premium (GMP)) looks low.
Now, let's explore how to cancel IPO application through the steps detailed below.
Steps to cancel the IPO application
You can cancel your IPO application anytime before the issue closes through your broker or trading platform. It’s important to track IPO timelines closely, as cancellation requests after the issue closes are not accepted. Refunds for cancelled applications are typically processed within a few working days, depending on the payment method used.
Understand that the bidding process operates only between 10 AM and 5 PM on working days. Therefore, you can only cancel an IPO application during these hours. Industry experts recommend completing IPO cancellations well before the final day of the issue, as time limits for cancelling a bid on the last day may be more stringent, potentially causing delays in processing.
For ASBA applicants (via bank account)
1. Log in to Internet Banking: Access your bank’s Internet Banking portal where you applied for the IPO using the ASBA facility.
2. Navigate to the ASBA section: Go to the ‘IPO’ or ‘ASBA’ services section.
3. View active applications: Select the IPO for which you’ve applied.
4. Select the application: Choose the IPO application you wish to cancel.
5. Click on withdraw/cancel: Use the 'Withdraw' or 'Cancel' option to remove your application.
6. Confirm cancellation: Confirm your choice when asked.
7. Receive confirmation: A confirmation message or email is usually sent by the bank.
8. Funds remain unblocked: If cancelled before allotment, funds will remain in your bank account.
9. Check status: Recheck to ensure the application is cancelled.
10. You must cancel before the IPO window closes (usually before 4 PM on closing day).
For non-ASBA applicants (via broker/UPI)
1. Open trading app/platform: Go to the stockbroker or trading platform.
2. Login: Enter your credentials.
3. Go to the IPO section: Navigate to your IPO applications.
4. Select the IPO: Choose the one you want to cancel.
5. Cancel application: Click ‘Cancel’ or ‘Withdraw’.
6. UPI users: No need to block funds; the UPI mandate will expire automatically.
7. Confirmation message: You’ll usually receive an email/SMS.
8. Must cancel before deadline: Ensure it's before the IPO closes.
9. Monitor status: Verify cancellation in your order history.
IPO cancellation rules for different investor categories
1. Retail investors: If you are investing less than ₹2 lakhs, you can cancel or modify your bids anytime before the subscription period closes. This provides maximum flexibility for small investors.
Non-institutional investors (NIIs) or high net-worth individuals (HNIs): If you are an NII or an HNI and invest more than ₹2 lakhs, you cannot cancel your applications completely. However, you can modify your bids, though you cannot reduce your initial bid amount.
3. Qualified institutional buyers (QIBs): If you are a QIB with substantial capital, you cannot cancel your IPO bids once placed.
4. Anchor investors: If you are a pre-public offering investor, you cannot withdraw your application after share allocation, as your participation is meant to build confidence among retail investors.
5. Employees: If you are a company employee applying under the employee quota, you can cancel or modify your application irrespective of the amount.
Important things to know about cancelling an IPO application
1. No cancellation charges: There are no fees or penalties for withdrawing your IPO application before allocation.
2. Fund release timeframe: While cancellation is immediate, the blocked funds may take varying periods to return to your account, depending on your bank's processing time.
3. Valid reasons for cancellation: You can withdraw an application in case of:
- Sudden market volatility
- Negative news about the company
- Concerns about overvaluation
- Low subscription levels that indicate weak demand
- An unfavourable comparison with peer companies
4. Timing considerations: Applications can only be cancelled during market hours (10 AM to 5 PM) and before the subscription period ends.
Conclusion
Understanding how to cancel IPO application empowers you to respond to changing market conditions and new information. The process has been significantly simplified with online platforms, making it accessible for investors at all experience levels.
While knowing how to cancel IPO application is important, remember that the decisions should be well-reasoned. Should circumstances change, you now know how to confidently navigate the cancellation process.
Remember that the ability to cancel an IPO application provides flexibility, but the most successful investors make thoughtful initial decisions based on thorough research.
FAQs
Are there any charges for the cancellation of my IPO application?
No, there are no charges or penalties for cancelling an IPO application. The cancellation process is completely free regardless of your investment amount or investor category. Once cancelled, your blocked funds will be released back to your bank account, though the exact timing may vary depending on your bank's processing procedures.
Can I exit the IPO after listing?
Yes, you can exit an IPO after listing, but it depends on the investor type. Retail investors can sell shares immediately on listing, while HNIs can also exit but may face liquidity concerns. Anchor investors have a 30–90 day lock-in, and promoters or pre-IPO investors face longer lock-ins of six months to three years.
Disclaimer: This article is intended solely for informational purposes. The views expressed in this article are personal. Axis Bank and/or the author shall not be liable for any direct or indirect loss or liability incurred by the reader arising from reliance on the content herein. Readers are advised to consult a qualified financial advisor before making any financial decisions. Axis Bank does not endorse or guarantee the accuracy of any third-party content or links included in this article.
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