An Initial Public Offering (IPO) in India is the process by which a public company offers its shares to the public for the first time, allowing it to become a publicly traded company. IPO is an important means for a company to raise capital and provide an opportunity for investors to buy shares in the company.

IPO in India attract both Retail and Institutional Investors. Retail Investors typically invest through Application Supported by Blocked Amount (ASBA) process, while institutional investors include Mutual Funds (MF), Foreign Institutional Investors (FII), and others.

Investor Categories for IPO Application:

1. Retail Individual Investors:
Indian resident individuals, NRIs and HUFs who participate in an IPO with less than Rs. 2 lakhs fall under the retail investor (RII) category. Investors in the RII category are allowed to bid at the cut-off price. They can also withdraw their bids while the issue is still open.

2. Non-Institutional Investors (NII) /High Networth Individuals (HNI):

a.Small NII/HNI: NII investors who place bids for shares worth Rs 2 to 10 lakhs are called Small NII (sHNI or sNII). One-third of the shares in the NII category are reserved for sNII.

b.Large NII/HNI: NII investors who bid for shares worth more than Rs 10 lakhs are referred to as Big NII (bNII or bHNI). 2/3rd of the shares in the NII category are reserved for bNII

3. Institutional Investors or Qualified Institutional Investors (QII):

Qualified institutional buyers include:

• Mutual funds,
• Commercial banks,
• Public financial institutions and
• Foreign portfolio investors.

There are other Investor category for which quota can be kept by the company such as Eligible Employees, Eligible Shareholders, and Anchor Investors.