IPO Regulation Basics

Before a company can launch an IPO, it must file a Draft Red Herring Prospectus (DRHP) with SEBI, disclosing its financials, business risks, and how the raised funds will be used - SEBI reviews this before the IPO is allowed to proceed, specifically to ensure investors have adequate, accurate information to decide with. Retail investors apply through ASBA (Application Supported by Blocked Amount) - the application amount is blocked, not debited, from your own bank account, and is only actually deducted if shares are allotted to you; if not, the block is released with no money ever having left your account in the first place. SEBI also sets rules on IPO allotment procedures (including a specific retail investor quota) and mandatory post-listing disclosure timelines, all aimed at keeping the process transparent and fair to smaller investors, not just institutional ones.