How to Apply for an IPO (ASBA & UPI)

How IPO application actually works (ASBA)

The most common point of confusion for new investors is the application plumbing: UPI mandates and blocked money. Here is the plain-English breakdown.

1. What is ASBA?

ASBA stands for Application Supported by Blocked Amount.

When you apply for an IPO, the money does not leave your bank account. Instead, the bank places a temporary hold ("block") on those funds.

The benefit: you continue to earn savings-account interest on the blocked money while you wait for the allotment result.

2. The UPI mandate flow

If you apply via a broker (Zerodha, Groww, Upstox and the like) using UPI, the flow is:

Step 1: you submit the bid in the broker app.
Step 2: the broker forwards it to the exchange, which sends a request to your UPI app (GPay, PhonePe, BHIM).
Step 3: you receive a mandate request in your UPI app and enter your PIN to authorise it.
Step 4: your bank blocks the funds.

3. Why mandates fail (and who to blame)

A frequent source of frustration is mandates that are delayed or revoked.

Common assumption: "my broker's app is broken."
Usually closer to reality: the broker is only the messenger. A large share of mandate failures come from your bank's UPI systems being overloaded, or from the IPO registrar's system lagging under load.
Practical tip: avoid applying in the last hour before the issue closes. Bank and registrar systems are heavily loaded with last-minute retail applications then, and mandates are more likely to fail or arrive late.

4. The refund / unblock timeline

If you do not receive an allotment, there is no "refund" as such, because the money never left your account — the block is simply removed.

After allotment is finalised, the registrar sends unblock instructions to the banks, typically the same day or the next working day.
Your specific bank can then take a further day or two to reflect the unblocked amount in your app. It is normal for the balance not to free up the instant allotment is announced.