Can I Apply for IPO Using a Non-Linked Bank Account? A Guide for Investors in India

Initially, it might seem challenging to apply for an Initial Public Offering (IPO) in India if your bank account is not linked to your demat account. However, with a clear understanding of the application process and the usage of mechanisms like ASBA (Application Supported by Blocked Amount), you can navigate this quite efficiently. This guide aims to provide a comprehensive overview of the requirements and processes involved.

Demat Account Requirement

To invest in an IPO in India, you need a demat (Dematerialization) account to hold the shares you purchase. This account is essential as it's where the shares bought in the IPO will be credited. For example, if you have an IIFL demat account and you wish to apply for an IPO through HDFC Bank, you would need to follow specific steps to ensure a smooth application process.

It's crucial to note that while you can apply for an IPO using a bank account that is not linked to your demat account, the shares will ultimately need to be credited to a valid demat account. Therefore, ensure that your demat account and application details match appropriately to avoid issues with share allotment.

Application Process via Your Bank Account

One of the advantages of applying for an IPO is the ability to use your bank account to make the application. This can be done through ASBA, a method where the bank blocks the required amount in your account until the allotment is finalized. This process can typically be done through any bank where you have a savings account. It's important to clarify that the bank account used during the application process should reflect the correct demat account details to avoid any complications.

If you wish to apply for an IPO through HDFC Bank but have your demat account with IIFL, you can still proceed. Simply apply through ASBA through HDFC while ensuring that your IIFL demat account is linked to the application. This way, you can complete the application process using your HDFC bank account, while still being able to claim the shares in your demat account.

Using Third-Party Bank Accounts

Using a third-party bank account or one that is not linked to your demat account is possible. However, the ASBA process remains crucial. Third-party accounts are generally valid for secondary market transactions but may require additional verification processes.

For example, to apply for an IPO using a third-party bank account, you can visit your bank’s website, log in, and find the services offered for investing in IPOs. Follow the prompts to input your demat account details and proceed with the application. Make sure to specify the correct DP ID (Demat Participant ID) and client ID to ensure a smooth process.

Key Takeaways

IDEY: You must have a demat account linked to your bank account to hold the shares you purchase. IDEY: You can apply for an IPO via any bank account, including one not linked to your demat account, using ASBA. IDEY: Ensure that your application reflects the correct demat account and DP ID to avoid issues with share allotment.

In conclusion, while the demat account is the primary account for holding shares, applying for an IPO using a non-linked bank account is manageable. By leveraging ASBA and ensuring that all details are correctly entered, you can successfully navigate the IPO application process.