IPO Undersubscribed or Withdrawn: Minimum Subscription, Refunds and Extensions

Most IPO coverage is about oversubscription: 50 times, 200 times, a lottery for allotment. The less common outcomes get far less attention. An issue can fail to attract enough bids. A company can pull an issue after bidding has started. A price band can be cut halfway through, which forces the issue to stay open longer. Each of these follows specific SEBI rules. The rules decide whether your money is released, how quickly, and whether you need to do anything.

This guide sets those rules out from SEBI's ICDR Regulations, 2018 (consolidated text amended up to 21 March 2026), SEBI's ICDR Master Circular (updated 9 February 2026), and the standard wording found in recent RHPs.

The minimum subscription rule

Regulation 45 says an issue must receive at least 90% of what the offer document offers, with an exception for offers for sale. The disclosures SEBI prescribes in Schedule VI make the practical meaning clear: the 90% test applies to the fresh issue part. On top of that, the issue must meet the minimum public offer set by Rule 19(2)(b) of the Securities Contracts (Regulation) Rules.

A second test is the number of allottees. Regulation 49(1) blocks a mainboard allotment if there would be fewer than 1,000 allottees. The SME chapter sets the floor at 200.

Jio Platforms' RHP (14 October 2026) brings these together. If the issue does not get 90% of the issue, or the Rule 19(2)(b) minimum, or falls below either after technical rejections, or does not get listing approval, the company must refund the entire amount.

Worked example (illustrative)

A company offers a ₹400 crore fresh issue plus a ₹200 crore OFS, ₹600 crore in all.

The "fresh shares first" order is common, but it is not identical across issues. Some RHPs say the first 90% of the fresh issue is allotted, then OFS shares, then any remaining fresh shares. Others put the whole fresh issue ahead of the OFS. The "Minimum Subscription" paragraph in the RHP's "Terms of the Issue" section says which applies.

Undersubscription in one category is not failure

A single category can be undersubscribed while the issue as a whole succeeds. Unsubscribed retail or non-institutional shares can be allotted to other categories (Regulation 32(1), first proviso). Unused shares in reserved portions move under Regulation 33(2)(d). The QIB portion is different: RHPs such as Jio's state that a shortfall in the net QIB portion cannot be filled with spill-over from other categories. When you read the subscription data, look at the issue-level numbers as well as the category you bid in.

SME issues are underwritten in full

Under Regulation 260, every SME IPO must be 100% underwritten, and the lead managers must take at least 15% on their own books. If public demand falls short, underwriters and nominated investors are obliged to buy the remainder. So an SME issue rarely "fails" the way an un-underwritten mainboard issue can. The shortfall simply ends up with the underwriters.

How and when your money comes back

Almost every application today uses ASBA or UPI, so for most investors a "refund" means unblocking. The money never left your account.

• Normal timeline: since 1 December 2023, all public issues follow a T+3 listing timeline, where T is the closing date. SEBI's master circular aims for non-allottees' money to be unblocked by T+2.
• If minimum subscription fails: Regulation 45(2) requires refunds no later than four days after the issue closes.
• Late unblocking: the master circular sets compensation from T+3 of ₹100 a day or 15% a year on the amount, whichever is higher, until the money is released. Regulation 50(3) separately requires the issuer to pay 15% a year interest if it misses the allotment or refund deadlines.

If your money is still blocked after the dates in the RHP, follow the steps in IPO refund not received: what to do.

Withdrawal by the company

There are three stages, each with different consequences.

1. Before the issue opens. A company can decide not to launch after filing the RHP. Nothing has been bid and nothing is blocked, so investors are not affected.

2. After the issue opens but before allotment. RHPs keep the issuer's right not to go ahead at this stage. Jio's RHP describes the process:

• A public notice with reasons appears within two days of the issue closing date, in the same newspapers that carried the price band advertisement.
• The stock exchanges are told promptly.
• The registrar tells the SCSBs and sponsor banks, which must unblock ASBA and UPI amounts within one working day of receiving that notice.

3. After bidding closes. If the company withdraws after the closing date and later wants to try again, Schedule VI requires it to file a fresh draft offer document with SEBI. In practice it starts over.

Withdrawal by you

These rules come from Schedule XIII of the ICDR Regulations and are repeated in RHPs. A retail investor withdraws through the same broker app or bank where they applied. Once the issue closes, nobody can withdraw.

Price band revisions and the required extension

Book built issues can revise the price band during bidding. Schedule XIII allows the floor to move up or down by up to 20%, with the cap reset within the usual 120% limit. Two rules protect bidders:

• Mandatory extension. Under Regulation 46(2), a revised band must extend bidding by at least three working days.
• Hard ceiling. Regulation 46(1) caps the total bidding period, including extensions, at ten working days.

The revision must be publicised through exchange notices, a public notice, the lead managers' websites and syndicate terminals. Read that notice. Depending on how the band moved, your bid may need revising so that it still falls at or above the new price, or so the right amount stays blocked.

Illustrative example: an issue opens on Monday with a three-day window ending Wednesday. On Tuesday the band is cut from ₹285–₹300 to ₹260–₹275. Bidding must now stay open for at least three more working days, so it cannot close before the following Monday, and the whole window still cannot exceed ten working days.

Extensions for other reasons

Regulation 46(3) also allows the issuer to extend bidding for force majeure, a banking strike or similar unforeseen events, with reasons recorded in writing. Since 18 May 2024, the minimum extension in these cases is one working day, down from three. The ten-working-day ceiling still applies.

Extensions push back the allotment, refund and listing dates. Check the revised timetable before planning around the money.

Common mistakes

• Assuming an undersubscribed category means the IPO failed. Look at the fresh-issue test and the issue-level total.
• Not checking whether a bid is still valid after a band revision.
• NIIs expecting to exit a bid. They cannot withdraw or lower.
• Waiting weeks on a blocked amount. Compensation starts from T+3, so raise it early.
• Confusing the minimum allottee rule with subscription. An issue can be fully subscribed by a few large bids and still fall short of 1,000 allottees.

Quick checklist

• Read the "Minimum Subscription" and "Withdrawal of the Issue" paragraphs in the RHP.
• Note whether the issue has a fresh issue, an OFS or both, and the order of allotment.
• Watch exchange notices for band revisions or extensions, and revise your bid if needed.
• Use the RHP timetable to know your unblocking date, and escalate quickly if it passes.
• Check final status with the registrar: registrar-wise guide.

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