What bidding at cut-off means, who is allowed to do it and how the blocked amount works.
Most Indian IPOs are book-built: the company announces a price band, for example ₹190 – 200, and the final issue price is set within it after bidding closes. When you tick the cut-off box on your application, you agree to buy at whatever that final price turns out to be.
Who can bid at the cut-off price?
| Investor category | Cut-off allowed? |
|---|---|
| Retail individual investors (bids up to ₹2 lakh) | Yes |
| Eligible employees and shareholders in their reserved quotas | Yes |
| Non-institutional investors (HNIs, above ₹2 lakh) | No, they bid at a specific price |
| Qualified institutional buyers and anchor investors | No |
Why is the upper band blocked?
At the time you apply, the final price is not known. So when you bid at cut-off, the amount at the upper end of the band is blocked: lots × lot size × upper price. Work out the amount with the IPO application amount calculator.
If the final price is set below the upper band, the difference is released after allotment. In practice, most issues are priced at the upper end.
Why bid at cut-off?
- Your bid stays valid. A bid below the final issue price is rejected. At cut-off, it is always at the final price.
- No guesswork. You don't have to predict where the price will be fixed.
- You pay the same as everyone. All successful retail applicants pay the final issue price.
Fixed-price issues
Some IPOs, especially smaller SME issues, have a single fixed price instead of a band. There is nothing to choose: you bid at that price.