For SME IPOs under the current framework, an Individual Investor must apply for exactly 2 lots and the application value must be above ₹2 lakh. If an individual applies for more than 2 lots, NSE classifies that bid under the Non-Institutional Investor (NII) – Individual category instead.
This rule applies to SME IPOs opening from 1 July 2025. It replaced the old Retail Individual Investor category, which is why some IPO websites and broker interfaces can still look confusing if they continue using the word “retail” informally.
Why did the minimum become 2 lots?
SEBI approved a higher minimum application size for SME IPOs and chose ₹2 lakh rather than ₹4 lakh after reviewing public feedback. It also standardised the minimum at two lots so that the application size and trading-lot framework remain aligned.
The key detail is that ₹2 lakh is a floor, not a fixed application amount. The actual minimum depends on the IPO's lot size and issue price. If one lot is worth ₹1.25 lakh, the minimum valid Individual Investor application is two lots, or ₹2.50 lakh.
NSE's current e-IPO FAQ states that the old Retail Individual Investor category has been replaced by the Individual Investor category for applicants bidding for 2 lots with an application size above ₹2 lakh.
Exactly 2 lots vs more than 2 lots
The category depends on the number of lots, not only on the rupee amount.
| Application | Current SME IPO category |
|---|---|
| 1 lot | Not a valid minimum Individual Investor bid |
| Exactly 2 lots | Individual Investor |
| More than 2 lots | NII – Individual |
Suppose an SME IPO has a lot size of 1,200 shares and an upper price of ₹110. One lot is worth ₹1,32,000, so the minimum Individual Investor application is 2 lots = 2,400 shares = ₹2,64,000. If the same person applies for 3 lots, the bid moves into the NII category even though the total amount is still well below ₹10 lakh.
This is why saying “SME retail minimum is ₹2 lakh” is not quite accurate. The actual minimum can be ₹2.2 lakh, ₹2.6 lakh, ₹3 lakh or more depending on the issue.
SME IPO bidding rules are stricter than mainboard retail IPOs
NSE's June 18, 2025 circular says cut-off price bidding is not available for any SME IPO category, so applicants must enter a bid price rather than simply selecting cut-off.
The same circular says downward modification and cancellation are not permitted for SME IPO bids. On the final day, bidding closes at 4:00 PM, while UPI mandate acceptance is available until 5:00 PM. Investors should still avoid waiting until the deadline because the application is not properly funded until the mandate is accepted and the amount is blocked.
Why do some apps still call it “retail”?
Officially, the SME Retail Individual Investor category was removed under the revised process. NSE now uses Individual Investor (IND) for an individual applying for exactly 2 lots.
Many IPO websites and broker screens still use labels such as “retail minimum application” because that wording is familiar to users. When checking NSE subscription data, look for “Individual Investors (IND category bidding for 2 Lots)”; applicants bidding for more than 2 lots appear under the NII section.
What about employee, shareholder and policyholder categories?
NSE states that the Employee category also requires at least 2 lots with application value above ₹2 lakh, with bids in lot-size multiples subject to a ₹5 lakh limit. Shareholder and policyholder reservation categories also require a minimum of 2 lots with application value above ₹2 lakh.
The exact reservation structure still depends on the specific offer document, so investors should check the RHP before applying. Credivant's guide on how to read an IPO RHP explains where to check issue structure, investor categories and other offer terms.
Quick example
Assume an SME IPO has an issue price of ₹85 and a lot size of 1,600 shares. One lot is worth ₹1,36,000, so an Individual Investor cannot apply for only one lot.
The valid minimum is 2 × 1,600 × ₹85 = ₹2,72,000. A 3-lot application would be ₹4,08,000 and would move into the NII – Individual category because it is more than 2 lots.
Bottom Line
The current SME IPO rule is straightforward: exactly 2 lots = Individual Investor; more than 2 lots = NII – Individual. The minimum application must be above ₹2 lakh, but the real amount depends on the lot size and issue price and can be materially higher.
Also remember the operational differences: SME IPOs do not offer cut-off bidding, downward modification or cancellation under the current process, and the last-day bidding window closes at 4:00 PM with UPI mandate acceptance available until 5:00 PM.
Disclaimer: IPO rules and issue-specific terms can change. Always verify the current NSE/BSE information and the specific offer document before applying.
