Any Retail Investor is eligible to apply in the NII category provided they fulfill certain criteria such as being at least 18 years of age, having a valid PAN number and Demat account, etc. The points are discussed in detail below.
Categories for application in an IPO-
In an IPO there are 3 categories from which an Individual can choose to apply. The 3 categories are-
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QIB Category- QIB or Qualified Institutional Buyers is a category under which, Banks, Mutual Funds, Financial Institutions, and other hedge Funds apply for an IPO. To apply under this category a certain minimum amount of Financial knowledge and certification is required hence common individual investors cannot participate under the QIB category.
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Retail Category- Retail category in an IPO is a category where any retail investor with an active Demat account can bid for a minimum of 1 Lot of shares. In order to Bid for an IPO in the Retail category, one must be above 18 years of age, must have a PAN number, and must have a Demat account into which the shares could be credited. If one fulfills the above-mentioned criteria’s then one is eligible to bid under the Retail category.
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NII Category - The NII category (Non-Institutional Bidders) is a category which includes HNI (High Net worth Individuals) eligible NRI’s & HUF’s who have superior investing power than the Retail Investors are categorized as NII category. To qualify under this category one should qualify all the points of a Retail Investor which is, Be over 18 years of age, Should have a PAN number, and should have a Demat account.
Now the only difference between the Retail category and the NII category is the application size. In the Retail category, one could apply for a minimum of 1 Lot and a maximum of 13-14 Lots or up to 2 Lakh Rupees according to the Lot size. Whereas in the NII category one has to apply for a minimum quantity of 13-14 Lots or 2 Lakh whichever is higher.
Difference Between the NII & Retail category-
- The minimum application in the Retail category is 1 Lot worth 13k-15k, whereas the minimum application for the NII category is worth 2 lakh or 14 Lots whichever is higher.
- The feature of Cut-off price is available for the Retail Category whereas it is not present in the NII category.
- A minimum of 15% of the total IPO is reserved for the NII category whereas a minimum of 35% is reserved for the Retail category.
- The allotment is based on a Proportionate basis in the QIB & NII category whereas it is Random or Lottery based in the Retail segment.
Conclusion-
To conclude any Individual who is over 18 years of age and has a valid PAN number, as well as a Demat account, can apply under the NII category if they are willing to apply for a minimum amount of 2 lakh. To apply for the NII category one should use the ASBA (Applications Supported by Blocked Amount) facility in the Internet Banking section provided by the Bank. In this way, the application money is blocked by the bank until the Allotment status is out.