How To Cancel An IPO Application?

What is withdrawal of IPO Application?

The meaning of an IPO application withdrawal is when an investor intends to cancel their initial request to purchase the company’s shares that are going public. On submitting an IPO application, the investor expresses an interest in buying the shares of a company on its initial public offering. However, there is also an option of withdrawing the application before the allotment of shares if they change their decision about purchasing shares. 

If you are preoccupied with how can I cancel my IPO application, you just need to follow some simple steps. The process typically includes contacting the intermediary or the broker who previously handled the application and requesting for cancellation of the order. However, the correct cancellation or withdrawal procedure must be followed to avoid cancellation charges or complications in the future. 
 

Steps to withdraw or delete IPO application:

How to delete IPO application is the most common query that people tend to have. Although the steps might vary slightly depending on the intermediary or the broker, some common steps are beneficial in withdrawing an IPO application. 

●    Immediately contact your intermediary or your broker who is in charge of looking after the application process. 
●    After contacting, you need to provide all the relevant details such as name, application number and any other relevant details that will help the broker for identification.
●    Provide the reason behind your withdrawal if asked for. 
●    Carefully follow the instructions provided by your broker, such as filing out the withdrawal form and following all the required procedures along with a written confirmation.
●    Finally, confirm the withdrawal with your broker and preserve the confirmation record. 

IPO Cancellation Rules for Different Investor Categories

The rules for cancelling an IPO application in India vary significantly depending on the investor category. According to SEBI regulations and broker practices:

• Qualified Institutional Buyers (QIBs): These large institutional investors do not have the option to cancel their IPO bid. They may only revise their bid upwards (increase quantity or price), but cannot withdraw or reduce it.
• Non‑Institutional Investors (NII / HNIs): High-net-worth individuals (who typically bid for more than ₹ 2 lakh) also cannot cancel their application once placed. They may revise it, but only to increase their bid.
• Retail Investors: Those bidding up to ₹ 2 lakh (or in the retail quota) have greater flexibility: they can cancel or modify their bids (either increase or decrease price/quantity) at any point before the subscription window closes.
• Employees / Shareholders (Reserved Quota): Investors applying under a reserved quota (such as employee or shareholder quota) are generally treated like retail investors, if their application is within the cap (e.g., ₹ 2 lakh), they can cancel or modify before the IPO closes.

Importantly, there are no cancellation fees charged by banks or brokers for permitted cancellations.

How to Cancel an IPO Application During the Subscription Period

If you belong to a category that is permitted to cancel (for example, retail investor), here are the typical steps to do so before the IPO closes:

1. If you applied via ASBA (Application Supported by Blocked Amount):
   • Log into your net banking portal (via the bank you used for the ASBA).
   • Navigate to the Order Book or IPO section and find your IPO application (via the transaction ID).
   • Select the option to withdraw or cancel the application, and confirm.
   • Once cancelled, your funds (which were blocked) will be unblocked by your bank in due course.
2. If you applied via UPI or broker/trading app:
   • Go to your broker or trading app. Navigate to the IPO / Orders / Application Status tab.
   • Identify the IPO application you want to cancel.
   • Tap on Modify or Cancel, then confirm the cancellation.
   • For UPI-based applications, you may also need to revoke or cancel the UPI mandate via your UPI app (like PhonePe, Google Pay, etc.) if the mandate is still pending.
3. Timing is critical:
   • Cancellations are allowed only before the IPO subscription window closes. After the issue closes, you lose the option to cancel.
   • Some broker / bank platforms may not permit cancellations right up to the official 5 PM cut-off—they may close cancellation earlier to process requests.

Important Things to Know About Cancelling an IPO Application

Here are some key considerations you should be aware of when cancelling an IPO application:

• No Charges for Withdrawal: There is generally no fee for cancelling a permitted IPO bid.
• Refund / Unblocking of Funds: If you cancel, the blocked amount (in ASBA) is released. The timing depends on your bank / broker.
• UPI Mandate Revocation: If you used UPI, simply cancelling via your broker app may not be sufficient, you may have to revoke the mandate in your UPI app as well.
• Modify vs Cancel: For retail investors, modifying the bid (changing quantity or price) is often possible instead of cancel, that might be preferable if you just want to adjust rather than exit.
• Post‑Closure Withdrawal: In some cases, you may be able to withdraw even after the IPO window closes but before the basis of allotment is finalised, by writing to the registrar.
• Category Constraints: Even if you cancel, there may be limits based on your investor category (as noted above).

Reasons for Cancelling an IPO Application

Investors often choose to cancel their IPO bids due to a variety of strategic, financial, or risk‑based reasons. Some of the most common include:

Negative News About the Company

If adverse information surfaces about the company after you have applied, such as legal issues, poor quarterly results, regulatory trouble, or management concerns, you may decide that the risk outweighs the potential reward, prompting you to cancel your application.

Concerns About Overvaluation

You might reassess the company’s valuation and conclude that it’s overpriced. If you feel that the issue price is too high relative to fundamentals, cancelling may help avoid potential losses if the stock corrects after listing.

Changes in Market Conditions

Macro‑economic factors or market sentiment can shift between the time you apply and when the IPO closes. Increased volatility or a downturn might make you rethink the IPO as a suitable investment at that moment.

Liquidity Issues

Personal liquidity constraints can also lead to cancellation. Perhaps some of your funds are tied up elsewhere (in other investments) or you need to preserve cash for other commitments, withdrawing from an IPO can free up that blocked amount.

Change in Investment Strategy

Your broader investment strategy might change: maybe your risk appetite reduces, or you prioritise other asset classes. If an IPO no longer aligns with your updated goals or timeline, cancelling may make sense.

Conclusion

To sum up, one must immediately talk with the intermediary or the broker about the cancellation process, irrespective of the reason behind the withdrawal. Follow the steps mentioned above and avoid the inclusion of any penalties or charges, or other future complexities.