Applying for an IPO in India is generally a straightforward process, but an application can still be rejected because of errors in application details, UPI problems, insufficient funds, duplicate applications, or other technical and regulatory issues.
An IPO application being rejected can be frustrating, particularly when the issue is heavily oversubscribed. However, rejection is different from simply not receiving an allotment. If an application is valid but there are more applicants than available shares, an investor may receive no shares through the allotment process. A rejected application, on the other hand, is not considered valid for allotment.
Understanding the common reasons for IPO application rejection can help investors reduce avoidable errors.
What Does IPO Application Rejected Mean?
An IPO application rejection means that the application was not accepted for the allotment process because it failed to meet one or more applicable requirements.
For example, an application could be rejected because:
- The UPI mandate was not successfully completed.
- The investor used a third-party bank account.
- The application contained incorrect information.
- Multiple applications were submitted in a way that violates applicable rules.
- The required funds could not be blocked.
- The bid quantity or price was incorrect.
The exact reason can vary depending on the IPO, intermediary, bank, registrar, and applicable regulations.
IPO Application Rejected vs No Allotment
These two situations are often confused.
Rejected Application
A rejected application is not considered valid for allotment.
No Allotment
A valid application can still receive no shares if demand exceeds the number of shares available for the relevant investor category.
For example, suppose an IPO has 1 lakh shares available for a particular category but receives valid applications for 5 lakh shares.
An investor may have submitted a completely valid application but still receive no shares because of oversubscription.
Therefore:
Rejected application = application was not valid for allotment.
No allotment = valid application, but shares were not allotted.
Common Reasons Why IPO Applications Are Rejected
- Incorrect PAN Details
PAN is an important identification detail in an IPO application.
If the PAN information entered in the application does not match the investor’s details, the application can face rejection.
Investors should carefully verify their PAN before submitting the application.
- Incorrect Demat Account Details
IPO shares are credited electronically to the investor’s demat account.
Incorrect demat account details can create problems during application processing or share credit.
Before applying, verify the relevant:
- Demat account number
- Depository details
- PAN
- Investor name
Using the details already available in your broker’s IPO application screen can help reduce manual errors.
- Using a Third-Party Bank Account
One important reason for rejection is using a bank account belonging to someone else.
For example, suppose Rahul wants to apply for an IPO but uses his friend’s bank account and UPI ID to make the application.
Such an application may not be valid under the applicable IPO rules.
Investors should generally use their own bank account and corresponding UPI ID when applying through the UPI-based IPO mechanism.
- Third-Party UPI ID
Using another person’s UPI ID can also cause an IPO application to be rejected.
For example, an investor may have their own demat account but enter a spouse’s, friend’s, or family member’s UPI ID.
The applicant should follow the applicable rules and use the appropriate UPI ID linked to their own bank account.
- UPI Mandate Not Approved
Submitting an IPO application through UPI does not necessarily complete the process.
The investor also needs to authorise the UPI mandate within the applicable timeline.
If the mandate remains pending, expires, or fails, the application may not be considered valid.
Common causes include:
- Not approving the mandate
- Insufficient funds
- Bank or UPI technical problems
- Incorrect UPI details
- Expired mandate
Investors should check their UPI application after submitting the IPO application and make sure the mandate is successfully authorised.
- Insufficient Funds in the Bank Account
The amount required for the IPO application needs to be available in the relevant bank account.
Suppose an investor applies for an IPO requiring ₹50,000, but only ₹30,000 is available in the account.
The bank may not be able to block the required amount, resulting in a failed mandate or application issue.
It is therefore advisable to maintain sufficient balance before submitting the application and approving the mandate.
- Duplicate IPO Applications
Submitting multiple applications for the same IPO using the same PAN can lead to rejection depending on how the applications are structured and the applicable rules.
Investors should not assume that submitting multiple applications automatically increases their chances of receiving shares.
Before making another application, check the IPO’s specific rules and the status of the existing application.
- Incorrect Bid Quantity
IPO applications generally need to follow the specified lot size and applicable bid quantity rules.
For example, if an IPO has a lot size of 50 shares, an application generally needs to follow the permitted multiples and category-specific limits.
Entering an incorrect quantity can result in application problems.
Always check the IPO’s:
- Lot size
- Minimum application quantity
- Maximum permissible quantity
- Investor-category limits
before submitting the bid.
- Incorrect Bid Price
In a book-built IPO, investors generally need to submit bids within the announced price band.
For example, if the price band is ₹200–₹220, a bid outside the permitted range would not be valid.
Retail investors may also have the option to select the cut-off price, where permitted.
Checking the price band before placing the bid can help avoid pricing errors.
- UPI Mandate Approved After the Deadline
Even if an investor receives the mandate request, approving it after the applicable deadline may not make the application valid.
The IPO application deadline and UPI mandate processing deadline should therefore be checked carefully.
Investors should avoid waiting until the final minutes to approve a mandate.
- Incorrect Investor Details
Errors in details such as the investor’s name, PAN, bank information, demat information, or other required fields can create problems.
Small data-entry mistakes can become significant when the information does not match the records maintained by the relevant financial institution.
Review the application carefully before submitting it.
- Bank Account or UPI Technical Issues
Temporary technical problems can also affect IPO applications.
For example:
- UPI services may be temporarily unavailable.
- The bank’s systems may experience downtime.
- The UPI application may fail to process the mandate.
- The mandate request may be delayed.
If a technical issue occurs, investors should first check the status before submitting another application.
How to Avoid IPO Application Rejection
A few simple checks can reduce the possibility of avoidable errors.
Use Your Own Bank Account
When applying through UPI, use an eligible bank account belonging to the applicant and follow the applicable requirements.
Verify Your UPI ID
Double-check the UPI ID before submitting the application.
Maintain Sufficient Balance
Keep enough funds available to cover the application amount.
Approve the Mandate on Time
After submitting the application, regularly check the UPI application for the mandate request.
Check PAN and Demat Details
Make sure the details match the records associated with your investment accounts.
Check the Lot Size
Verify the minimum bid quantity and applicable multiples before entering the number of shares.
Avoid Unnecessary Duplicate Applications
Do not submit multiple applications without understanding the applicable rules and the status of your original application.
Apply Before the Last Moment
Submitting the application earlier gives you more time to deal with UPI, bank, or technical problems.
IPO Application Rejection Checklist
Before submitting an IPO application, investors can use this quick checklist:
| Check | What to Verify |
| PAN | Correct and matching applicant details |
| Demat account | Correct account information |
| Bank account | Applicant’s eligible bank account |
| UPI ID | Correct and supported UPI ID |
| Bank balance | Sufficient funds available |
| Price band | Bid is within the permitted range |
| Lot size | Correct quantity and applicable multiples |
| Mandate | Approved within the applicable timeline |
| Application | No prohibited duplicate application |
| Deadline | IPO and mandate deadlines checked |
What Happens to Money After an IPO Application Is Rejected?
For a UPI-based application, the application amount is generally blocked rather than immediately transferred to the company.
If the application is not accepted or shares are not allotted, the applicable blocked amount is released according to the IPO process.
The exact timing can depend on the bank, intermediary, registrar, and applicable processing timelines.
If the amount remains blocked for longer than expected, investors should first check the application and mandate status and then contact their bank or intermediary through its official support channel.
Can You Reapply After an IPO Application Is Rejected?
Whether an investor can submit another application depends on the reason for rejection, the IPO’s subscription period, and the applicable rules.
If the IPO is still open and the issue permits a correction or fresh application, an investor may be able to apply again after resolving the underlying problem.
However, investors should not simply submit another application without checking the original application status because duplicate applications can create additional complications.
Conclusion
An IPO application can be rejected for several reasons, including incorrect PAN or demat details, third-party bank accounts or UPI IDs, failed UPI mandates, insufficient funds, incorrect bid details, duplicate applications, and missed deadlines.
The best way to avoid rejection is to verify your application details carefully, use the appropriate bank account and UPI ID, maintain sufficient funds, and approve the UPI mandate within the applicable timeline.
It is also important to remember that IPO rejection and IPO non-allotment are not the same thing. A valid application can receive no shares simply because the IPO is oversubscribed.
Disclaimer: This article is for educational purposes only and does not constitute investment advice or a recommendation to apply for any IPO.
