What is Grey Market Premium (GMP) in IPO? - Full Form, Meaning, Types and How to Trade

By REPAKA PAVAN ADITYA

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Updated on: Sep 24th, 2025

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4 min read

To apply for an Initial Public Offering (IPO), you must have an active demat and trading account. You can submit your application online through a stockbroker's platform or a bank's net-banking portal. Let's explore how to apply for an IPO and the benefits that come with it.

Key Highlights:

  • The IPO can be applied for via both Offline and Online methods through your stockbroker.
  • An online IPO bid can be paid for by blocking funds via ASBA or UPI.
  • Blocked funds will be debited once the IPO is allotted and will become unheld if the IPO is not allotted.

How to Apply for an IPO?

To apply for an IPO, you must have an active demat and trading account with a SEBI-registered stockbroker for holding and selling shares, as well as a funded bank account to execute the mandate for blocking funds for the UPI/ASBA process. 

With the help of your stockbroker, you can check the current and upcoming IPOs in the market, and you can apply if you find an IPO that seems interesting to you.

How to Apply for an IPO Online?

Applying for an IPO online is now a straightforward process. With the help of technology, you can simply apply for an IPO via ASBA and UPI by following the steps below.

Applying IPO Online via ASBA:

Applying for the IPO via ASBA(Application Supported by Blocked Amount) through net banking from your registered bank account is very simple if you follow the steps below.

Step 1: Log in to your Bank’s “Net Banking portal”.

Step 2: Head to the IPO application page.

Step 3: Click on “Apply IPO” in the IPO application page.

Step 4: Select the IPO from the drop-down menu.

Step 5: Enter the Bid details, such as “LOT SIZE & PRICE”.

Step 6: Click on the “Submit” option to complete the Bidding process.

Before applying via ASBA, ensure your demat account is linked to your bank account to avoid any interruptions.

Apply IPO Online via UPI:

Applying for the IPO via UPI is a very user-friendly option for retail investors, as they can apply using their daily UPI apps.

Step 1: Log in to your ”Demat Account”.

Step 2: Head to the IPO application page.

Step 3: Click on “Apply IPO” in the IPO application page.

Step 4: Select the IPO from the drop-down menu.

Step 5: Enter the Bid details, such as “LOT SIZE & PRICE”.

Step 6: Enter the UPI ID of the registered bank account for blocking the funds.

Step 7: Click on the “Submit” option to confirm the bid.

Step 8: Once you confirm the bid, you will receive a mandate link to the UPI ID, which you must approve before the closing time of the IPO. 

Before applying via UPI, ensure your demat account is linked to your bank account to avoid interruptions.

How to Apply for an IPO Offline?

Applying the IPO in the offline method is a traditional method that was used in the early 2000s. Even if you want to apply for IPOs using the Offline Method, you can do so by following the steps below.

Step 1: Download the IPO Application form from the Broker/Bank/Exchange(NSE/BSE).

Step 2: Fill in the required details, such as DP ID, Bank details, and Bid details, etc.

Step 3: Submit the Form to your Broker/Bank.

Step 4: The Bank/Broker will block the funds for the Mandate.

Step 5: Once the mandate is done, you will receive confirmation of the mandate.

Document Required for Applying for IPO

Particularly for applying for an IPO, you don’t require any mandatory documents for opening a Demat account; you need the documents mentioned below for identity verification and address verification 

Identity Proof:

Address Proof: 

  • Voter ID Card
  • Driving License
  • Aadhaar Card
  • Passport
  • Ration Card
  • Utility bill 

Eligibility Criteria for IPO Application

To invest in an Initial Public Offering (IPO), there are certain criteria as mentioned below

SEBI Approved Investor: You must be in the category of investors for which SEBI approves bidding for the IPO, such as

  • Qualified Institutional Buyers (QIBs)
  • Non-Institutional Investors (NIIs)
  • Retail Individual Investors (HNI, BHNI)
  • Employees

Demat and Trading Account: You need to have a Demat and Trading account with a SEBI-registered stockbroker.

Funds: You have sufficient funds in your bank account to cover the IPO application. The Funds will be blocked until the completion of the IPO allotment process. If you are allotted shares, the funds will be debited. If not, the amount will be released.

Benefits of Online IPO Application

Applying for IPO via online comes with a lot of benefits, such as you no longer have to wait for the confirmation of IPO bidding as compared to the traditional process (Offline). 

  • Time Saving: The Online IPO application will reduce the time of applying for IPO
  • Reduces Human Errors: The Offline IPO process carries a risk of data entry errors. The Online IPO Process removes these errors by automatically fetching the data.
  • Transparency: Online IPOs offer greater transparency than offline IPOs, enabling you to track your entire IPO status directly from your mobile device.

Conclusion

Applying for an IPO can be a rewarding experience for investors looking to participate in a company's Book Building Process with the help of ASBA and UPI. The process has become significantly simpler, faster, and more transparent. Investors can confidently apply for IPOs and benefit from the growth of new companies entering the secondary market.

Related Articles:
1. How to Apply for an IPO?
2. How to Check IPO Allotment Status Online?
3. How to Download IPO Form Online from NSE and BSE?
4. What is Pre IPO and How to Buy Pre IPO Shares?
5. What is FPO in the Stock Market? - Full Form, Meaning, How to Apply
6. IPO vs FPO: Key Difference Between FPO and IPO
7. SME IPO - Full Form, Eligibility, Listing Process & How to Apply

Frequently Asked Questions

Is GMP a good indicator?

GMP in IPO is considered a good indicator that tells the approximate listing price of the stock unofficially.

What happens if GMP is high?

If the GMP is high, it denotes that the listing price of the stock in the IPO is higher than the IPO price band.

Is GMP and listing price the same?

GMP and the listing price are not same becaust GMP is an indicator for the listing price always the listing price have slight difference from the GMP.

How to track the grey market premium?

The grey market premium can be tracked using the third-party indicators available in online or can manually calculate using the price difference the ipo price band and the unlisted price.

Can we trust grey market Premium?

The GMP is the trusted source to identify the listing price of the IPO, but it is not accurate all the time.

About the Author
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REPAKA PAVAN ADITYA

Stocks and Mutual Funds Research Analyst
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I manifest my zeal in financial quantitative & quantitative research and have been instrumental in creating a robust process for the evaluation and monitoring of mutual funds. I’m responsible for Equity and Mutual Funds Research while creating instrumental mathematical models for portfolio construction after evaluating funds, and I play an integral role in analyzing changes in mutual funds, micro, and macro-economic indicators, and equity market events and trends. My views on asset classes which are integral in creating an investment strategy for any profile. Read more

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