Every IPO divides its shares into reserved buckets for different types of investors: retail (individuals applying up to ₹2,00,000), HNI or NII (individuals and others applying above ₹2,00,000), and QIB (large regulated institutions like mutual funds and insurance companies). You compete for allotment only against others in your own bucket.
Why are there categories at all?
Without reservations, large institutions could soak up an entire popular issue and leave nothing for individual investors. So the market regulator, the Securities and Exchange Board of India (SEBI), requires shares to be earmarked category-wise. In a typical book-built IPO, up to 50% goes to QIBs, at least 15% to HNIs/NIIs, and at least 35% to retail investors. The company's RHP states the exact split for that issue.
Who falls in which bucket?
Retail Individual Investor (RII). Any individual whose total application is worth up to ₹2,00,000. This is where most readers of this article will apply. Retail applicants can bid at cut-off, and when the retail portion is oversubscribed, allotment works as a lottery among valid applications.
HNI / NII. High Net-worth Individual is the common name; the official term is Non-Institutional Investor. This bucket is for applications above ₹2,00,000, wealthy individuals, family trusts, companies. It is further split into a "small" sub-bucket (applications of ₹2,00,000 to ₹10,00,000) and a "big" sub-bucket (above ₹10,00,000). HNI bidders cannot bid at cut-off; they must pick a price. If applying here interests you, the mechanics are in how do I apply for an IPO in the HNI (NII) category?
QIB. Qualified Institutional Buyers, mutual funds, insurance companies, banks, pension funds, foreign portfolio investors. These are regulated institutions presumed to be able to assess an issue professionally. A slice of the QIB portion is often given to anchor investors, who commit money a day before the issue opens.
An example: three applicants, one IPO
Himalaya Agro, a fictional food company, launches an IPO at ₹200 per share with a lot of 70 shares (₹14,000 per lot).
| Applicant | Application | Category | Why |
|---|---|---|---|
| Kavita | 1 lot = ₹14,000 | Retail | Total ≤ ₹2,00,000 |
| Kavita (larger) | 14 lots = ₹1,96,000 | Retail | Still ≤ ₹2,00,000 |
| Joseph | 15 lots = ₹2,10,000 | Small HNI | Crosses ₹2,00,000 |
| A mutual fund | ₹40 crore | QIB | Regulated institution |
Notice the boundary: the moment Joseph's application crosses ₹2,00,000, he leaves the retail bucket and its lottery, and enters the HNI bucket with its own rules and its own level of oversubscription.
Some IPOs add extra reserved buckets, for employees of the company, or for existing shareholders of its parent. Those sit alongside the three main categories.
Which bucket to apply in is a personal call: the retail bucket has the cut-off convenience and the one-lot lottery; HNI needs much more capital and blocks it just the same. Whatever the category, applications start the same way. See how to apply for an IPO on the Rupeezy app.
Things to keep in mind
- The ₹2,00,000 retail ceiling is defined by regulation, and category rules can change. Always check the current issue's RHP.
- You compete only within your bucket. "Oversubscribed 60 times overall" matters less to you than how many times your own category is oversubscribed.
- Applying in a bigger category does not, by itself, mean better odds. The HNI bucket is often more heavily oversubscribed than retail.
- One PAN gets one application per IPO. Applying in multiple categories with the same PAN gets all of them rejected.
Read next
Who are anchor investors in an IPO? — The institutions allotted shares before the issue even opens.