IPO Price Band Revision and Bid Period Extension: SEBI Rules and What Happens to Your Bid

Most IPOs keep the price band they announce and close on the day printed in the RHP. Occasionally a company changes the band partway through bidding, or a bank strike or other disruption forces the bidding window to stay open longer. Both are governed by specific rules in SEBI's Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018, and both affect bids you have already placed.

This guide sets out what the regulations allow, how many extra days are required, and what happens to a retail bid already sitting in the book.

How a price band is set in the first place

Under Regulation 29 of the ICDR Regulations, a book-built issue has a floor price and a cap price.

• The cap can be at most 120% of the floor and must be at least 105% of the floor (the minimum gap was added in 2022).
• The issuer must announce the floor price or price band at least two working days before the issue opens, in a pre-issue advertisement.
• Neither the floor nor the final price can be below the face value of the share.

So a band of ₹200 to ₹210 is valid (the cap is 105% of the floor). A band of ₹200 to ₹250 would not be (the cap would be 125%).

When the band can be revised

Schedule XIII of the regulations, which lays out the book-building process, allows the band to be revised during the bidding period, within these limits:

• The floor can move up or down by at most 20% of the floor disclosed in the RHP.
• The revised cap must again respect the 105% to 120% rule, this time measured against the new floor.
• The revision must be widely publicised. That means informing the stock exchanges, issuing a public notice, and showing the change on the relevant websites and on the syndicate members' bidding terminals.
• If the band is lowered, the RHP or the public notice must explain how any resulting shortfall in project funding will be covered. Allotment cannot happen until that funding is tied up.

Worked example: the 20% limit

Suppose the RHP floor is ₹200. The revised floor can sit anywhere from ₹160 (20% lower) to ₹240 (20% higher).

If the company drops the floor to ₹180, the new cap must be between ₹189 (105% of ₹180) and ₹216 (120% of ₹180). A revised band of ₹180 to ₹189 would comply. A revised band of ₹150 to ₹160 would not, because ₹150 is more than 20% below the original floor.

The mandatory extension after a revision

Regulation 46(2) is explicit. If the price band is revised, the issuer must extend the bidding period by at least three working days. Regulation 46(1) also caps the total bidding period of an IPO at ten working days, so the extension has to fit inside that limit. The same pair of rules appears in Schedule XIII and in the SME chapter of the regulations, so they apply to SME issues as well.

The reason is simple. Investors who bid at the old band need time to see the new one and decide whether to revise or withdraw. Three working days is the minimum window SEBI considers fair.

Extensions for force majeure and bank strikes

Regulation 46(3) covers a different case, where the price has not changed but something outside the issuer's control has disrupted bidding. Force majeure, a banking strike or similar unforeseen circumstances allow the issuer, for reasons recorded in writing, to extend the bidding period.

The minimum extension here has changed. An amendment that took effect on 18 May 2024 cut it from three working days to one working day and added the word "unforeseen" to the trigger. The ten-working-day overall cap still applies. The logic is that when the price has not moved, keeping every investor's money blocked for three extra days is excessive.

A real case: ITI's 2020 FPO

ITI Limited's further public offer in January 2020 shows both kinds of extension. Further public offers follow the equivalent rules in a different chapter of the regulations.

• ITI's committee revised the price band on 28 January 2020. As the rules required, the bid period was extended by three working days, to close on 31 January 2020.
• On 31 January 2020, citing an ongoing banking strike, ITI extended bidding again, this time by four working days to 5 February 2020. It relied on the force majeure provision, which at that time required a minimum of three working days. The band stayed at ₹71 to ₹77.

Under today's rules, the strike extension could have been as short as one working day.

What happens to bids already placed

This is where investors tend to get caught out. The rules differ by category.

Retail bids at the cut-off price

Retail investors who tick "cut-off" have money blocked at the cap of the band.

• If the band is revised upward and you neither revise your bid nor top up the amount, the number of shares in your bid is adjusted downward for allocation purposes. Your existing block then covers it without any extra payment, and you are treated as having agreed to bid at the cut-off. Because shares are allotted in lots, a downward adjustment can leave you below a full lot. The safer course after an upward revision is to revise your bid yourself.
• If the band is revised downward, you can revise the bid (for example, to buy more shares at the lower price). If you do not, the excess blocked amount is released.

Example. The original band is ₹200 to ₹210 and the lot is 70 shares. A one-lot cut-off bid blocks ₹14,700 (70 × ₹210). The band is then cut to ₹180 to ₹189. At the new cap, the same lot needs only ₹13,230 (70 × ₹189), so the difference of ₹1,470 is released if you leave the bid alone.

Retail bids at a specific price

If you entered a specific price rather than cut-off, check whether that price still falls inside the revised band. A bid priced below the new floor, or above the new cap, would no longer be valid at that price. Revise it during the extended window.

Non-institutional and QIB bids

HNIs and institutions cannot bid at cut-off, and they cannot withdraw or lower their bids at any stage once placed. They can only revise upward. A downward band revision can also move a bid between categories. If an HNI bid of slightly over ₹2 lakh falls to ₹2 lakh or less at the new price, it may be considered under the retail category, if the bidder is eligible for it.

Revising through UPI

Retail bidders can revise or withdraw until 5:00 PM on the closing day, which after an extension means the new closing day. If you applied through UPI, each revision generates a fresh UPI mandate that you must approve again. Revisions must also go through the same broker or intermediary you used originally.

Where to find revision notices

• Corporate announcements on the NSE and BSE websites for that issuer
• The public notice in the newspapers that carried the original price band advertisement
• The lead managers' websites
• Your broker's IPO screen, which usually shows the revised band and new closing date

Quick checklist

• If a band is revised, find the new closing date, at least three working days after the original.
• If you bid at cut-off, recalculate one lot at the new cap.
• After an upward revision, consider revising instead of letting the bid shrink.
• After a downward revision, check that the excess amount is released.
• Approve the new UPI mandate for every revision.

Common mistakes

• Assuming the old closing date still applies. Extensions are announced by notice, not by SMS from your broker.
• Forgetting that a revision needs a new mandate. An unapproved revision mandate can leave you with the old bid or none at all.
• Treating an extension as a bad sign. A force majeure or bank-strike extension is procedural. A price band revision is the one worth reading about, because it tells you how demand is shaping up.

For more background, see our SEBI IPO regulations guide, IPO subscription status explained and IPO undersubscribed or withdrawn: what happens.

Disclaimer: This article is for educational purposes only and is not investment advice. Read the RHP and consult a SEBI-registered adviser before investing.