Initial Public Offerings (IPOs) continue to attract wide interest from retail investors in India. These investors are drawn to the listing gains that newly listed companies often provide. With many good companies tapping the markets with their IPOs, investors are always keen on applying to as many quality IPOs as feasible.

However, constraints on the availability of funds in a single bank account linked to your demat limit the ability to apply for multiple IPOs simultaneously. This is where savvy investors have found a smart way to enhance their IPO investing potential—by linking more than one bank account to their demat account.

Understanding Demat Accounts and Their Role in IPO Investing

A demat or dematerialised account is the gateway for transacting in the stock markets. It holds all your stock and mutual fund investments in electronic form. Having a demat account is mandatory for investing in any IPO, as the shares allotted in IPOs are credited electronically to demat accounts. Know Your Customer (KYC) completed demat accounts with a feature to integrate bank accounts are a prerequisite for hassle-free investing in IPOs.

While rules allow investing through a single demat account, they do not restrict the number of bank accounts an investor can link to their demat account. This regulatory leeway provides the foundation for investors to connect multiple bank accounts to a single demat account.

The IPO Bidding and Allotment Mechanism

During an IPO subscription period, interested investors bid for shares by filling out application forms and making payments against their bids from their linked bank accounts. The money is typically deducted from the bank account within one to two days.

After share allotment, only the final amount related to the shares allotted is debited from the bank account. The blocked balance amount is automatically unblocked and refunded to the same bank account. Thus, the entire application, bidding, payment, and refund mechanism is tied intricately to the investor’s demat-linked bank account.

Why Linking Multiple Bank Accounts to Demat Ups Your IPO Game

1. Agility in Making Applications

Applying to popular IPOs often requires funds to be available at short notice, spanning a few days. Investors with funds spread across many bank accounts can take quick calls to apply as per their cumulative funding capability instead of limited funds in just one account. This approach is especially advantageous when a current IPO generates high demand and fast action is required.

2. Mitigates Oversubscription Risks

Heavily oversubscribed IPOs run the risk of lesser allotments or only partial allotments. Spreading bids by applying from different accounts in different investor categories improves success ratios.

3. Easier Funds Segregation

With pre-allocated IPO fund pools in separate accounts, investors can set limits, better track utilisation, and avoid excessive bidding.

4. Streamlined Reconciliation

Hassle-free refunds directly into respective accounts mean quick and automated reconciliation of funds without confusion.

Key Advantages of Multiple Accounts for Investors

1. Multiplies Investment Opportunities

Applying through 2-3 accounts allows bidding for more IPOs simultaneously compared to a single account. This expands your ability to take part in quality offerings.

2. Methodical Investing Habits

Sectioning funds for IPOs in different accounts enables discipline, better planning, and control over investments in new offers rather than reckless applications.

3. Refunds Handling Ease

Quick electronic refunds into the respective accounts are applied to reduce paperwork and eliminate waiting for pending refunds to apply for another IPO.

Step-by-Step Account Linking Process

Follow these steps to link additional bank accounts hassle-free to your demat account:

1. Login to Your Demat Account

Login online through your depository website or mobile app and navigate to account management options.

2. Locate ‘Add Bank Account’

Select the option to add a new bank account to your demat account from the actions list.

3. Fill in Details Accurately

Enter all the required details like account number, bank name, and IFSC code carefully for successful verification.

4. Upload Verification Documents

Attach a cancelled cheque leaf with a printed name or recent bank statement for address and credential verification.

5. Approve OTP

Validate linking by approving the OTP sent to your registered mobile number for enhanced security. The new account gets linked within 1-2 working days after verification by your depository participant. Repeat for additional accounts.

Key Challenges and Ways to Overcome Them

While linking multiple accounts has clear advantages, here is how you can tackle some likely challenges:

Technical Teething Issues

Minor linking errors or glitches can occur initially when you start linking multiple bank accounts to your demat account. To troubleshoot any process issues, get help from your depository participant's helpdesk or raise a ticket detailing the exact issue. The helpdesk should be able to assist you in resolving any technical glitches during the linking process.

Avoiding Confusion and Misuse

To avoid confusion and potential misuse of funds, maintain separate bank accounts exclusively for IPO funding with pre-defined limits through diligent planning. Also, regularly audit the bank statements of your linked accounts to ensure the accuracy of transactions related to your IPO applications. This helps prevent misuse and promptly catch any erroneous debits or credits.

Enhanced Risks Control

To fortify online account access against security risks, create strong and unique passwords for each linked bank account and your demat account. Furthermore, enable two-factor authentication on both your demat account and the linked bank accounts for enhanced security. Additionally, update your registered contact information, including mobile numbers and email IDs, across all accounts to receive timely security alerts about transactions.

Conclusion

Linking more than one bank account smartly to your demat account empowers you to apply for more IPOs simultaneously. It enables structured investing through dedicated funding pools and operational ease in managing multiple refunds. So go ahead and link 2-3 accounts to maximise your application footprint in new IPO offerings. Stay secure with prudent checks against misuse while enjoying the flexibility.