What are categories in which IPO allotment applications can be made by investors?

IPO applications are broadly classified in these three categories:

Qualified Institutional Bidder (QIB)

As the name suggests, QIBs are qualified institutional buyers as defined by SEBI’s Issue of Capital and Disclosure Requirements (ICDR) regulations. Generally, 50% of the offer is reserved for QIBs. Typical examples are foreign portfolio investors (FPIs) (other than Category III FPIs), scheduled commercial banks, mutual funds registered with the SEBI, venture capital funds registered with SEBI, foreign venture capital investors (FVCIs), alternative investment funds (AIFs), multilateral and bilateral development financial institutions, state industrial development corporations, insurance companies registered with the Insurance Regulatory and Development Authority (IRDA), provident funds with a minimum corpus of INR250 million, pension funds with a minimum corpus of INR250 million.

Non-Institutional Investor (NII)

This category is a mix of institutional and individual buyers. Generally, 15% of the offer is reserved for this category. Bids in the category need to exceed INR200,000. Typical examples include Category III FPIs, resident Indian individuals, HUFs (in the name of Karta), companies, corporate bodies, eligible NRIs, scientific institutions, societies and trusts.

Retail Individual Investor (RII)

This category is purely meant for small investors, whose bid should not exceed INR200,000 per person. Usually, 35% of the offer is reserved for this category, although companies have started reducing allocation to this category in recent months. Resident Indian individuals, HUFs (in the name of the Karta) and eligible NRIs not falling in the NII category can apply under the RII category. The biggest differentiating criterion between NII and RII is the size of application.