Investing in a Mainboard IPO (Initial Public Offering) listing on the stock exchange is a popular way for retail and institutional investors to participate in the growth journey of companies that become publicly listed. Before applying for an IPO, stock exchange listing, it is necessary to understand the rules set by the Securities and Exchange Board of India, which is the regulatory body that controls India's capital markets.

This article highlights the most important SEBI guidelines, each investor must know before applying for the IPO.

1. Eligibility to Invest in IPOs

SEBI allows different categories of investors to participate in the stock exchange:

• Retail Individual Investors (RIIs) - Investment of up to ₹2 Lakhs per stock exchange listing.

• High Net-worth (HNIS) - Investment above ₹2 lakh.

• Qualified institutional buyers (QIBS) – Include mutual funds, banks, FPIs, etc.

• Non-institutional investor (NII)- Typically HNI and Corporation.

Each category's IPO award has its quota/reservation.

2. ASBA (Application Supported by Blocked Amount)

SEBI mandates that all IPO applications stock exchange should be made through the ASBA facility, where the application amount is blocked in the investor's bank account and only the allocation is debuted. This eliminates the need to pay advances and ensures transparency.

3. UPI Mandate for Retail Investors

For retail investors searching through brokers or online platforms, SEBI requires UPI (integrated payment interface) as a payment mechanism. UPI-based applications. Permission is granted for bids up to 5 lakhs.

4. Lock-in Period for Promoters

According to SEBI guidelines for IPO, promoters should maintain a lock-in period from 18 months to 3 years for part of the ownership, depending on the compliance position. This ensures that the promoter remains obligated to the company after listing.

5. IPO Grading is Voluntary

While IPO grading is available by credit rating agencies, SEBI has made it voluntary, not mandatory. Investors should not only decide on grading, but the basic things should be analysed.

6. Misuse of Funds is Punishable

SEBI strictly monitors how IPO are used. Organizers can be discussed by abuse, misunderstanding, or dishonest punishment, legal action or the capital market.

Conclusion

Understanding SEBI’s guidelines is crucial for making informed investment decisions in IPOs. While Mainboard IPOs offer promising opportunities, they also take risks that investors must evaluate independently. Always read the prospectus, confirm the track list for the company, and avoid promotional investments.

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