In the past few months, I have been applying for multiple IPOs. Even though the allotment of IPO is like a lottery, if I am applying for 10-20 IPOs I am getting 2 or more allotments & the listing gains are good which pays off for the IPO hustle. Now the problem is that for IPO application, we need to have liquid cash in the bank which goes into hold until allotment. If I target to apply for 4-5 IPOs at the same time, then I need to have 5-15L as liquid cash in bank account. But logically 3-5 L should be sufficient as it is unlikely for anyone to get all the 5 IPO allotments at the same time and I can use the rest of the amount for better purposes.
To overcome this fund shortage, I was thinking of opening an Overdraft facility based on my savings/salary account. I assumed that if I have OD for 10L or so, I just need to have 5L in account for IPO application. As the funds are technically not withdrawn/utilized there will be no fee/charges. (the cash that I have in my account should be sufficient in the event of 1 or 2 IPO allotments). Even in the odd scenario where I get more allotments than the cash in hand, the OD will fill in and the interest charged is marginal (as I am just looking for listing gains and hence the OD tenure is not more than 5-6 days) and can be easily set off by the listing gains.
So my questions are:
1) - Is my assumption of banks not charging interest on OD amount "on hold" - is that true or not? (technically I am not drawing out any funds but is just on hold by the bank during the IPO process)
2) - If I have to open a current account just for ODs what is the procedure? Will they give me OD facility just because I opened a current account and have a good CIBIL and salary? (I do not have any operating business - where I can show profits)
3) - Is there any better method that anyone is following to minimize the free cash in bank account - for IPO application?
To overcome this fund shortage, I was thinking of opening an Overdraft facility based on my savings/salary account. I assumed that if I have OD for 10L or so, I just need to have 5L in account for IPO application. As the funds are technically not withdrawn/utilized there will be no fee/charges. (the cash that I have in my account should be sufficient in the event of 1 or 2 IPO allotments). Even in the odd scenario where I get more allotments than the cash in hand, the OD will fill in and the interest charged is marginal (as I am just looking for listing gains and hence the OD tenure is not more than 5-6 days) and can be easily set off by the listing gains.
So my questions are:
1) - Is my assumption of banks not charging interest on OD amount "on hold" - is that true or not? (technically I am not drawing out any funds but is just on hold by the bank during the IPO process)
2) - If I have to open a current account just for ODs what is the procedure? Will they give me OD facility just because I opened a current account and have a good CIBIL and salary? (I do not have any operating business - where I can show profits)
3) - Is there any better method that anyone is following to minimize the free cash in bank account - for IPO application?
