Applicable fees and charges
The following charges are applicable on IPO financing:
| Types of fees | Charges applicable |
| Interest rate | Up to 24% per annum and/or flat interest up to Rs. 30,000 per IPO application till the date of allotment |
| Processing fee | Up to 4.72% of the loan amount (inclusive of applicable taxes). |
| Part-prepayment charges |
Not applicable |
| Annual maintenance charges | Not applicable |
| Bounce charges | Not applicable |
| Penal interest | Up to 24% p.a. in case of default or in case of non-observance of any of the terms of the agreement |
| Stamp duty | As applicable |
| Brokerage charges* | As applicable |
| DP charges** | As applicable |
| Foreclosure charges | Not applicable |
| Pledge confirmation charges* | As applicable |
| Pledge innovation charges* |
As applicable |
| Demat share transfer charges (post invocation) | 0.024% + flat Rs. 5.9 (minimum being Rs. 64.9) (inclusive of applicable taxes) |
| Legal charges | At actuals |
*Charges levied by Broker to BFL and the same is being passed on to the clients
**Charges levied by NSDL/ CDSL to BFL and the same is being passed on to the clients
How to avail IPO Financing
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Frequently asked questions
Bajaj Finance offers interest rate of up to 24% per annum and/or flat interest up to Rs. 30,000 per IPO application till the date of allotment for IPO Financing.
Apart from that there are other fees applicable. Common fees include processing fees, part-prepayment fee, foreclosure charges and many more. These fees are typically charged upfront or deducted from the loan amount and can add to the total cost of the loan.
Yes, Bajaj Finance charges a processing fee of up to 4.72% (inclusive of applicable taxes) on IPO Financing.
The fees and charges associated with IPO Financing are mentioned above. It's important to carefully consider the interest rate and any fees associated with a loan before accepting it to understand the full cost of borrowing and ensure that the terms are reasonable and affordable.
IPO Financing offers several benefits to investors:
Leverage: Investors can access funds to participate in IPOs without using their own capital entirely, allowing for larger investments.
Diversification: It enables investors to diversify their portfolio by participating in multiple IPOs simultaneously.
Potential for higher returns: If the IPO performs well, investors can potentially earn a higher return on their investment compared to the cost of financing.
No opportunity loss: Investors can seize IPO opportunities without waiting for their own funds to become available.
IPO financing can be considered a form of indirect finance. In IPO financing, investors pledge their IPO shares as collateral to obtain a loan to invest in an IPO. It involves a financial intermediary, such as a brokerage or lending institution, facilitating the loan. Indirect finance typically involves an intermediary between the lender and borrower, as is the case with IPO financing.
Some limitations of IPO financing include:
Interest costs: Borrowers incur interest expenses on the loan, which can reduce overall returns if the IPO underperforms.
Risk of margin calls: If the IPO's share price falls significantly, investors may face margin calls and need to repay the loan or provide additional collateral.
Market volatility: IPOs can be highly volatile, and investors may face heightened risks when using leverage through financing.
Eligibility requirements: Not all investors may be eligible for IPO financing, as it often depends on factors like creditworthiness and the lending institution's policies.
IPO (Initial Public Offering) and bonds are distinct forms of investment:
IPO: An IPO is the first sale of a company's shares to the public. Investors buy shares of the company, becoming partial owners, and hope to profit from potential stock price appreciation.
Bond: A bond is a debt instrument where investors lend money to an issuer, which can be a corporation, government, or other entity. In return, investors receive periodic interest payments and the bond's face value at maturity. Bonds are typically considered lower risk than stocks.
The key difference is that IPOs represent equity ownership, while bonds represent debt with regular interest payments. IPOs involve potential for capital appreciation, while bonds offer income through interest payments and repayment of principal at maturity.
