IPOs: Changes in HNI Allotment [Non-Institutional Investor (NII) category]

SEBI has tweaked the rules for the allotment of shares for HNIs (applicants in the NII category) from April 1st, 2022.

In an IPO, allotment of shares is made category-wise. Each category of investors is entitled to a reservation in the allotment process. The usual category-wise reservation is listed below:

Category Reservation
Retail Investors 35%
NII 15%
QIB 50%

SEBI has revised the category-wise reservation by sub-dividing the NII (Non-Institutional Investor) category into two parts - a. Applications between Rs. 2 to 10 lacs and b. Applications above Rs. 10 lacs. Investors in the NII category will get a reservation of 1/3rd of the total NII reservation. The new reservation schedule will look like this:

Category Reservation
Retail Investors 35%
NII - Rs. 2 to 10 lacs 5%
NII - above Rs. 10 lacs 10%
QIB 50%

In the NII (2 to 10 lacs) category, the allotment will be done on a draw of lots basis (lottery basis like the retail category). In the NII (above 10 lacs) category, the allotment process will remain pro-rata.

For example, an IPO is subscribed 10 times in both the NII categories and you are applying for an IPO in the NII category:

  1. For 5 lacs - There is a 10% probability of you getting an allotment of Rs. 2 lacs. [Before the change in regulation, you would have received a firm allotment of shares worth Rs. 50 thousand]
  2. For 50 lacs - You will get an allotment of shares worth 5 lacs.

You can check the amendment (2022) of the SEBI ICDR (Issue of Capital & Disclosure Requirements) Regulations to learn more.


In case a company that isn’t profitable for the last three financial years is launching an IPO, the minimum subscription required from the QIB category increases to 75% and Retail reduces to 10%. The NII category, in such cases, stays unchanged at 15%. Read more.


Someone having 2 lacs and felt good to be categorized as an HNI investor with preferential VIP like pro rata allotment. doesn’t feel the same any more when applying for the IPO again.

The social gauge of being categorized as rich is getting farther and farther away.