How to invest in IPOs - A complete guide for NRI investors

Initial Public Offerings (IPOs) are becoming the investor-preferred buzzword in recent times. According to reports, India registered a 22% share of the global IPO activity in the first quarter of 2025 alone, with 62 IPOs raising $2.8 billion.

As a Non-Resident Indian (NRI), are you also looking to capitalise on the IPO trend in India? If you are, here’s some good news - You can add IPOs to the list of NRI investments in India!

The regulations specified under the Foreign Exchange Management Act allow NRIs to invest in IPOs in India.

Here is a complete breakdown of how to invest in IPOs and the rules for the same. But first, let’s start with the basics and understand the concept of IPOs. 

What is the meaning of IPOs in the stock market?
 

IPOs are the way for unlisted companies to go public, offer their shares to common investors, and list on the stock exchange. IPOs allow companies to -

1. Raise capital through the issue of fresh shares
2. Enhance their brand visibility
3. Garner investors’ trust
4. Obtain funds for debt repayment and expansion

IPOs are a good way to invest in companies with good potential. If the companies grow after listing, you can make a good profit.

Things NRIs need for investing in IPOs
 

While you can invest in IPOs, you will need the following -

1. NRE/NRO account
 

A Non-Resident Ordinary (NRO) or Non-Resident External (NRE) account is a must to invest in the IPO through the Application Supported by Blocked Amount (ASBA) route.

2. NRI Demat account
 

A Non-Resident Ordinary (NRO) or Non-Resident External (NRE) Demat account is needed to store the shares that might get allocated to you if your IPO application is successful.

3. Trading account
 

While the Trading account is not mandatory for the IPO, it will be needed if you wish to sell the IPO-allocated shares in the future.

4. PIS account

While the PIS account in NRE/NRO is not mandatory for the IPO, it will be required if you wish to sell the IPO-allocated shares in the future to calculate the applicable TDS.

5. Sufficient funds in your account
 

You need sufficient funds in the NRO/NRE account, which will be blocked for the IPO. If your application is successful, the funds will be automatically debited from your account.

6. NRI investment provision
 

You would also have to check whether the company launching the IPO allows NRI investments. It can be checked from the company’s Red Herring Prospectus (RHP). Alternatively, you can invest through the NRO (non-repatriable) option.

With IDFC FIRST Bank, you can apply for IPOs, rights issues, call money, Non-Convertible Debentures (NCDs), Real Estate Investment Trusts (REITs), and Infrastructure Investment Trusts (InvITs) through IDFC FIRST Bank's Net banking or Mobile App in just three simple clicks.

How to invest in an IPO in India?
 

Now that the basics are covered, let’s jump to the ‘how’ part of investing in the IPO.

Here is a step-by-step guide on how to invest in an IPO in India with IDFCV FIRST Bank -

1. Step 1 -  Login to IDFC FIRST Bank Net Banking/Mobile App
2. Step 2 – Go to ‘Accounts’ and choose ‘Investments’
3. Step 3 – Choose ‘Apply in IPO’, select the IPO you want to invest in and apply online

The timings are as follows -

The amount required for your bid will be blocked in your NRI bank account through the ASBA process.

You will receive a confirmation of your application via email or SMS. On the IPO allotment date, you can find out whether your IPO application was successful or not. If the application is successful, the shares will be allotted to your NRI Demat Account, and the blocked amount will be used to pay for them. If the application is unsuccessful, the shares will not be allotted. The amount blocked would be released into your NRI account.

Taxation on capital gains for NRIs
 

Knowing how to buy an IPO in India is not sufficient. You also need to be aware of the tax implications of the profits you earn when you sell the shares after allotment.  As a rule, profits earned from IPO investments are subject to capital gains tax. Here’s how -

1. If you sell the shares within 12 months, you incur short-term capital gains, which are taxed at a rate of 20%
2. If you sell the shares after 12 months, returns of up to ₹1.25 lakhs will be tax-free, and excess returns will be taxed at 12.5%

Tax implications
 

Why come to IDFC FIRST Bank for this specific investment
 

If you're eyeing the next IPO, consider using IDFC FIRST Bank's NRI services to simplify the application process. With IDFC FIRST Bank, you can enjoy -

1. A digital NRE/NRO account with interest going up to 7.25% per annum
2. One-touch PIS account
3. IDFC FIRST Bank mobile app for easy IPO investing
4. A dedicated relationship manager for all your investment needs.

Open a tailored NRI account and invest in an IPO of your choice – start online in just a few steps.

What makes IDFC FIRST Bank NRI Banking stand out?
 

1. A comprehensive suite of NRE, NRO, and Seafarer Savings Accounts tailored for global Indians
2. Earn interest daily and enjoy monthly interest payouts on your savings
3. Attractive interest rates up to 7.00% p.a. on NRE and NRO Savings Accounts
4. Tax-free returns on NRE Savings and Fixed Deposits for optimised wealth growth
5. Flexible and fully repatriable NRE and FCNR Deposit options with assured returns
6. Open accounts instantly and manage them seamlessly via our top-rated mobile banking app
7. Higher ATM withdrawal limits, cashback benefits, and a free VISA Signature Debit Card with no annual charges
8. 24X7 seamless, zero-fee fund transfers and remittance solutions for convenient money management
9. Access mutual funds, travel insurance, term insurance, and the FIRST WOW! Credit Card for a complete financial solution
10. Recognised among the World’s Best Banks 2025 by Forbes in partnership with Statista