Inside the IPO Under HNI Category: A Closer Look at Access and Allocation

In every major IPO, institutional and individual investors compete within defined categories that determine how shares are distributed. The HNI category, formally known as the Non-Institutional Investor segment, plays a distinctive role in this process. It bridges the gap between institutional and retail participation, allowing investors with larger capital commitments to bid more flexibly across price and quantity. This framework brings broader capital into public offerings and keeps the allocation process organized across investor classes.

What Is HNI In IPO And Who Qualifies

In an Indian IPO, an HNI (High Net Worth Individual) refers to an investor who applies for shares worth more than ₹2 lakh in a single application. This classification is defined by the Securities and Exchange Board of India (SEBI) to distinguish between small retail bids and larger, non-institutional applications. HNI investors participate under the Non-Institutional Investor (NII) category, which is separate from both Retail Individual Investors (RII) and Qualified Institutional Buyers (QIB).

Who Qualifies as an HNI in IPO:

Any individual, resident or non-resident, can apply in the HNI category if the minimum bid amount exceeds ₹2 lakh. The applicant must have a Demat account, a linked bank account, and must comply with KYC norms. HNI bids do not require registration as institutional investors, yet they follow stricter allocation and funding rules due to the higher capital involved.

HNI Quota, Investor Categories And Allotment Rules

IPO shares are divided among defined investor categories under SEBI regulations. The HNI quota, officially part of the Non-Institutional Investor (NII) segment, typically receives 15% of the net issue size, depending on the type of IPO. This structure maintains balance between institutional demand and individual participation.

Investor Category	Typical Allocation	Application Size	Allocation Method
Qualified Institutional Buyers	50% or more	₹2 Crore for Mainboard IPO, ₹10 crore for SME IPO	Proportionate basis
Retail Individual Investors	10% to 35%	Up to ₹2 lakh	Lottery system if oversubscribed
Non-Institutional Investors (HNI)	15%	₹2 lakh to ₹10 lakh	Proportionate or lottery depending on oversubscription

Allotment process

• Small HNI (investment between ₹2 and ₹10 lakh): If the category is heavily oversubscribed, the allotment is often based on a lottery system to ensure a minimum of one lot for as many applicants as possible. However, the chances of allotment are generally lower compared to larger bidders.

• Big HNI (investment over ₹10 lakh): In cases of oversubscription, shares are typically allotted on a proportionate basis. An applicant receives a fraction of the shares they applied for, based on the overall oversubscription rate. For example, if the category is oversubscribed by 100 times, an applicant for 1,000 shares may be allotted 10 shares.

• Guaranteed minimum allotment: In an oversubscribed IPO, both Small and Big HNIs can get a minimum lot. For applicants applying for more lots than the category's oversubscription rate, allotment is guaranteed.

• SME IPOs: Allotment in SME IPOs is done on a strictly proportionate basis, with no distinction between Small and Big HNIs.
  

Eligibility, Documents And Account Requirements to Apply for IPO in HNI Category

Applying under the HNI category requires certain accounts and documentation that meet SEBI’s eligibility and verification norms. Each applicant must be fully KYC-compliant before submitting an IPO bid.

Key requirements include:

• PAN card registered with the same details as the bank and Demat account

• Active Demat account with a valid Depository Participant (DP ID and Client ID)

• Linked bank account, preferably ASBA-enabled, for fund blocking during the application

• Completed KYC verification under SEBI guidelines, including updated address and identity records

For NRI applicants:

• Investments must comply with FEMA and RBI regulations

• Application should route through an NRE or NRO account, depending on repatriation preference

• Supporting documents such as passport, overseas and Indian address proof, and FATCA declaration are generally required

While UPI mandates are common in the retail segment, most HNI applications continue through ASBA-enabled bank accounts or broker interfaces. Applicants should confirm the latest operational procedures with their respective banks or intermediaries to avoid submission delays.

How To Apply for IPO in HNI Category

HNI applications are typically routed through ASBA-enabled bank accounts or broker platforms linked to the investor’s Demat account. Most high-value investors coordinate this process through their investment advisor or relationship manager to ensure accuracy in bidding and compliance with SEBI rules.

Step 1. Access the ASBA or broker interface

Open the IPO section in your net banking or trading platform. Confirm that your account is ASBA-enabled and linked to the correct Demat ID.

Step 2. Choose the IPO and select HNI/NII category

Select the preferred IPO and mark your category as Non-Institutional Investor (HNI). The total bid must exceed ₹2 lakh to qualify.

Step 3. Enter bid details

Specify both price and quantity within the stated band. HNI applications are not eligible for the retail cut-off price option, so bids must indicate a precise price point.

Step 4. Review and authorize fund blocking

The bid amount is blocked in your account once the application is authorized. Advisors often verify this step to confirm that the application meets eligibility and funding requirements.

Step 5. Modify or withdraw within the bidding window

The IPO window remains open for three to four days. Investors can revise or withdraw bids until the closure time.

Step 6. Track application and allotment status

After closure, allotment status can be checked through the stock exchange or registrar’s website. Funds are released automatically if shares are not allotted.

Pricing Rules, Cut-Off Bids, Revisions And Withdrawal Restrictions

The bidding process for HNIs follows SEBI’s pricing and modification framework, which differs slightly from the retail category. Each rule governs how bids are placed, altered, or canceled before the issue closes. For long-term trends on how IPO pricing impacts listing outcomes, see our analysis of India’s IPO performance over the past decade.

1. Cut-Off Price Not Available to HNIs

HNIs must specify an exact bid price within the IPO price band. The cut-off option, which allows automatic allocation at the discovered price, is available only to retail investors. This rule ensures transparency in high-value applications and reflects each investor’s price view.

2. Bid Revisions and Modifications

Investors can revise their bids multiple times while the IPO remains open. Revisions usually involve changing the bid price or quantity. Each modification replaces the previous bid and requires confirmation through the ASBA or broker interface.

3. Withdrawal Restrictions

Bids may be withdrawn or canceled only during the active bidding window. Once the issue closes, applications are locked for processing and cannot be withdrawn, as per the SEBI 2023 guidelines.

4. Fund Blocking and Release

The bid amount remains blocked in the applicant’s bank account through ASBA until the allotment is finalized. If shares are not allotted, the blocked amount is automatically released to the investor’s account without manual intervention.

Pre-Application Checklist

• Verify that your Demat account, PAN, and KYC records are active and consistent across platforms.

• Confirm your ASBA-enabled bank account is linked to the same PAN and Demat ID.

• Check official IPO announcements for opening and closing dates, price band, and minimum HNI bid value, usually ₹2 lakh or more, depending on lot size.

• Review recent NII/HNI subscription data to gauge market sentiment and demand levels.

• Refer to the latest SEBI circulars (2022–2024) for updates on Big HNI sub-categories and revised allotment rules.
  

Conclusion

HNI investors operate in a space where access and accuracy decide results. The real value lies in preparation by tracking subscription data, understanding price behavior, and reviewing SEBI updates before committing funds. Over time, such groundwork turns IPO participation into a measurable component of wealth strategy rather than a reaction to market momentum.

FAQs

Who is considered an HNI in an IPO?

An HNI (High Net Worth Individual) is an investor applying for shares worth more than ₹2 lakh in a public issue. The application must be made under the Non-Institutional Investor (NII) category. This applies to residents, NRIs, and corporates submitting bids above the threshold.

How is IPO allotment done in the HNI category?

Allotment under the HNI segment follows a proportionate basis. Applicants receive shares in proportion to their bid size. There is no lottery system as seen in the retail category.

Is it good to apply for an IPO in the HNI category?

The HNI route allows for potentially higher allocation during oversubscription, provided sufficient capital is committed. Still, allotment depends on overall demand and is never guaranteed.

Are chances of allotment higher in the HNI category?

Not necessarily. HNI subscriptions can surge several times over in popular IPOs, reducing the proportion allotted. Larger bids may still get partial allotment when demand is moderate.

Can a normal person apply in the HNI category?

Yes. Any individual investor can apply as an HNI by placing a bid above ₹2 lakh. A valid PAN, Demat account, and KYC compliance are required.

Is allotment guaranteed in the HNI category?

No. Allotment depends entirely on the number and size of bids received within the HNI quota. Applications exceeding available shares are scaled down proportionately.

Can I apply in both retail and HNI categories?

No. A single investor cannot submit applications under both categories for the same IPO using the same PAN. Such duplicate entries are treated as invalid and may lead to rejection.