Know How to Apply for IPO Using UPI in Detail

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UPI is becoming a necessary tool for transferring money or paying bills. You can make all types of payments that you require with a few taps on your smartphone at any time of day. The ability to apply for an Initial Public Offering (IPO) through your UPI ID has been added for your convenience. The Securities and Exchange Board of India (SEBI) has made the UPI method mandatory for ordinary investors who apply through registered brokers, depository participants (DPs), and Registrar and Transfer Agents (RTAs). Now, the procedure is much more precise and less complicated. 

Continue reading to learn what UPI ID is for IPO and how to apply for IPO using UPI.

UPI ID

A payment mechanism called UPI (Union Payment Interface) allows for the immediate transfer of money from one bank account to another. The National Payments Corporation of India (NPCI) developed UPI, which allows multiple banks to connect and transmit money via a single platform. Due to its 24/7 operation, you can transfer money anytime and from any location. Your UPI ID and PIN are all you need to send and receive money. The UPI uses a very safe encryption mechanism to keep all essential transactions secure. Numerous apps that enable UPI, like Bharat Interface for Money (BHIM), Google Pay, and Paytm, allow users to produce information before initiating any transaction by verifying it with their bank account.

How to Apply for an IPO Using Your UPI ID

Using UPI to submit an IPO application can differ from broker to broker. Before submitting your application, you should carefully read the guidelines that your stockbroker has supplied. The procedures to apply for an IPO using the UPI code are as follows:

1. Select an SEBI-registered brokerage

The first step is to select a stockbroker who has been granted permission by SEBI to participate in the IPO. To find a list of licensed brokers, go to the SEBI website.

2. Open a Demat account

A Demat account is required to apply for an IPO. You can open a Demat account with a depository participant registered with the SEBI.

3. Create a UPI ID

A UPI ID is required to process payments using UPI. This ID can be created via the mobile banking app for your bank or a UPI-compatible payment app like BHIM, Google Pay, etc.

4. Apply for the IPO

You must register for the IPO using the portal provided by your brokerage. You will receive a user ID and password from the broker to access their platform.

5. Application Submission

After logging in, you can send in your IPO application. Your personal information, bank information, and the number of shares you want to apply for must be provided.

6. Make the Payment

You must pay for the shares for which you are applying after submitting your application. Enter your UPI ID and follow the onscreen instructions to make the payment using UPI. After paying, you can connect to your stockbroker’s site to see the status of your application. Your Demat account will receive the shares on the allotted date if your application is approved.

Benefits of Using the UPI ID for IPO Investments

Using the UPI to invest in an Initial Public Offering has a number of advantages. These are: 

  • With UPI, payments are quick and simple without having to go to a bank or use a check. Without leaving your home or place of business, you can pay for your IPO application using UPI on your computer or mobile device. Payments received through UPI are handled instantly, so your IPO application will be confirmed before the payment has a chance to clear. 
  • The UPI platform employs two-factor authentication, which is secure and prevents unauthorised transactions.
  • You can also create a UPI PIN on the platform, which adds another level of protection to your transactions. 
  • Using UPI reduces paperwork because you don’t need to physically send demand drafts or checks to pay for your IPO application. 
  • You may follow your UPI transactions in real time, allowing you to pinpoint the precise moment that your payment has been received and your IPO application was approved. 
  • You can use UPI to make payments regardless of which bank you have an account with because it is accepted by a vast number of banks in India.

Risks of Applying for an IPO Using a UPI ID

Along with the advantages, applying for an IPO application through UPI carries various risks as well. These are:

  • Technical problems, like network outages, server malfunctions, or inaccurate UPI ID details, could occur during the payment process. 
  • There is a chance that someone will access your account and carry out illicit transactions using UPI fraud. You should always keep your mobile device and UPI PIN secure and routinely check your account to make sure that no fraudulent transactions have occurred in order to reduce this risk. 
  • Investing in an IPO entails stock market risk, which implies that the values of your shares could change, and you could incur a financial loss. You should do extensive research on the company and take into account your personal investment objectives, risk tolerance, and time horizon before making an IPO investment. 
  • While completing the IPO application form, there is a chance of giving false information. You should always double-check the information you enter before submitting the form, and if you have any questions, you should confirm it with your stockbroker. 

Precautions to Take while Applying for an IPO Using a UPI ID

Here are several safeguards you can use while registering for an IPO using the UPI ID to prevent fraud:

  • Select a stockbroker who is permitted to take part in the IPO and is registered with SEBI. On the SEBI website, a list of authorised brokers is available. Before sending the payment, make sure you have confirmed the stockbroker’s UPI ID. You should only send the payment to a validated UPI ID.
  • Always pay with a safe device, like your own computer or cell phone. Use private Wi-Fi networks or PCs instead of public ones because they might not be safe.
  • Activate two-factor authentication for your UPI account to increase transaction security. This indicates that in addition to your UPI PIN, you will need to enter a one-time password.
  • Never share your UPI PIN with anybody or store it on your computer or mobile device.
  • Check your UPI account frequently to make sure no fraudulent transactions have occurred. Report any questionable activity right away to your bank if you see it.
  • Verify the progress of your IPO application by logging into your stockbroker’s platform after completing the payment. Check whether your application was accepted and the money was handled.

When applying for an IPO through a UPI ID, you can reduce the risk of fraud by adopting these measures. All investments, including IPOs, carry dangers, so it’s crucial to remain cautious and knowledgeable at all times.

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