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

Key Takeaways

NRIs can invest in IPOs in India through the NRO (Non-Repatriable) or NRE (Repatriable) route, provided the issuing company allows and SEBI approves.
NRIs can apply for IPO through their NRO (Non-repatriable) or NRE (Repatriable) bank accounts coupled with (NRO/NRE) Demat & Trading accounts.
NRI customers require no documentation to apply for an IPO. However, the customer must have an NRE/NRO bank account and a Demat and Trading account with a SEBI-registered broker.
NRIs should consider volatility risks, exchange rate fluctuations, tax implications, and repatriation rules when investing in IPOs.

17 Jun 2025 by Team FinFIRST

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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.

A guide to invest in Indian stocks for NRIs

Can an NRI Invest in a PPF?

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 -

Raise capital through the issue of fresh shares
Enhance their brand visibility
Garner investors’ trust
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 -

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

The timings are as follows -

Channel	Cut off timelines for IPO on the last day of issue
	HNI – Application >2L	Retail – Application < 2L
Online (Net banking/Mobile App)	3:30 pm	4:30 pm
Paper-based application	1:00 pm

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 -

If you sell the shares within 12 months, you incur short-term capital gains, which are taxed at a rate of 20%
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 Banking services to simplify the application process. With IDFC FIRST Bank, you can enjoy -

A digital NRE/NRO account with interest going up to 7.25% per annum
One-touch PIS account
IDFC FIRST Bank mobile app for easy IPO investing
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?

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

Frequently Asked Questions

What is a Red Herring Prospectus (RHP)?

The RHP is a detailed document which outlines -

The company’s activities
IPO details
Intended usage of the funds, etc.

How is the dividend earned from IPO shares taxed?

The dividend income is added to your total income and taxed at your applicable tax slab rates.

What is the repatriation limit of the NRO account?

The repatriation limit for an NRO account is $1 million per financial year.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.