UPI mandate

A retail investor applying for shares in an IPO no longer hands over a cheque. Instead, the money is blocked in the investor's own bank account until allotment, and the tool that authorises that block is the UPI mandate.

The investor gives a UPI ID on the application form. The Sponsor Bank then sends a mandate request to that UPI ID, asking the investor to authorise the block. The investor approves it with a UPI PIN, and the amount is blocked — not debited — in the investor's own account.

The UPI mechanism with ASBA applies to retail individual investors applying through intermediaries, for application values up to Rs 5 lakh. Introduced in a phased manner from 1 January 2019, it works alongside SMS alerts and an invoice in the UPI app that lets the investor verify the mandate details before approving.

On the listing timetable, UPI mandate acceptance closes at 5 p.m. on T day (T being the issue closing date). The registrar shares the debit file with the Sponsor Bank once the basis of allotment is approved, so that funds equal to the allotment are debited and the rest is unblocked. For applications that get no allotment, or only a partial one, the unblocking of the UPI mandate must be completed within T+2 days.

As a further safeguard, SEBI has required RTAs to make standardised, validated and exclusive UPI IDs available from 1 October 2025, so investors can verify they are paying a genuine, registered intermediary through the "SEBI Check" facility.

Mrs Deshmukh applies for 300 shares of Bharat Renewables Ltd at Rs 480, a value of Rs 1,44,000 — within the Rs 5 lakh UPI limit. She enters her UPI ID on the application form on T day (Monday, issue closing day) and approves the mandate request in her UPI app with her UPI PIN before the 5 p.m. cut-off.

The basis of allotment is approved on T+1. She is allotted only 100 shares (Rs 48,000) because the retail category is oversubsribed. On T+2, Rs 48,000 is debited from her account for the allotted shares, and the balance Rs 96,000 is unblocked and available to her again — inside the T+2 window the workbook prescribes for non-allotted or partly allotted UPI mandates.

Chapter 10, section 10.3.2 (UPI Mechanism) and 10.3.3 (Standardised UPI IDs), plus the section 10.5 listing timetable. Expect the Rs 5 lakh application ceiling, the 5 p.m. on T day mandate acceptance time, and the T+2 unblocking deadline.

• UPI blocks funds; it does not debit them upfront. Money leaves the investor's account only on confirmed allotment.
• The Rs 5 lakh limit is specific to the UPI route for retail individual investors — larger or non-retail applications use other ASBA channels.
• T+2 is the unblocking deadline for the shortfall, not the date funds are transferred for the allotted portion, which happens on the same T+2 cycle but is a debit, not an unblock.
• A UPI mandate is not the same thing as a Delivery Instruction Slip or any depository-side instruction — it operates entirely on the banking/payments side of the application.