Qualified Institutional Buyer (QIB)
A qualified institutional buyer is not simply a large investor. It is an investor of a kind SEBI has named, and the naming is what counts: a large investment on its own does not bring an investor within the category. The investor has to fall within a listed entry and meet whatever condition that entry carries, which for several of them means registration with a regulator.
That matters to anyone holding mutual funds. A mutual fund registered with SEBI is the first entry on the list, so when one participates in a public issue it does so in this category.
Dhanvantri Capital Services Private Limited, known as Dhanvantree, is an AMFI-registered mutual fund and Specialised Investment Fund distributor, ARN-194216, and a distributor of portfolio management services registered with APMI, APRN10201. We explain how the category works. The choice is yours.
Who is a qualified institutional buyer
An entity of a type named in the regulations, and nothing else. The SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018 define the term at Regulation 2(1)(ss), and that definition works by listing kinds of organisation rather than by setting any threshold of size, assets or experience.
There is no separate QIB licence to apply for. An entity does not come within the category by growing or by bidding large. It comes within it because its kind is named, and several of those names carry a condition of their own: registration with the Board, the IRDAI or the PFRDA, a minimum corpus, or in one case a limit on what the status may be used for.
This is the opposite of how the other two categories work. A retail individual investor is defined by being an individual bidding up to ₹2 lakh, and a non-institutional investor is defined by being neither of the other two. Only this category is defined by naming who belongs.
The full form, and why each word carries weight
Qualified Institutional Buyer. Three words, and each is doing work in the definition rather than describing a kind of investor loosely. Reading them separately explains most of the confusion about who belongs in the category and who is kept out of it despite being very large.
Qualified points at the list. The entity has to fall within one of the named descriptions, and several of those descriptions carry conditions of their own.
Institutional describes the general shape of the category, with one narrow exception. Almost every entry is an organisation, and an individual does not come within the category for a public issue however much they invest, which is why wealthy individuals bid as non-institutional investors. The exception is entry (xiv), set out below.
Buyer is about participation in offerings for which the regulations recognise the status, rather than ordinary market trading. The category decides who may be allocated securities in particular kinds of offering. It is not a rating of an investor’s wealth or sophistication.
The fourteen entries on the list
Fourteen descriptions, and the detail inside them decides more cases than the headings do. Regulation 2(1)(ss) covers the entries below, and an entity falling outside all of them is not in this category whatever its size, its track record or the amount it wishes to invest.
| Entry | Who it covers |
|---|---|
| i | Mutual funds, venture capital funds, alternative investment funds and foreign venture capital investors registered with the Board |
| ii | Foreign portfolio investors, other than individuals, corporate bodies and family offices |
| iii | Public financial institutions |
| iv | Scheduled commercial banks |
| v | Multilateral and bilateral development financial institutions |
| vi | State industrial development corporations |
| vii | Insurance companies registered with the IRDAI |
| viii | Provident funds with a minimum corpus of ₹25 crore |
| ix | Pension funds with a minimum corpus of ₹25 crore, registered with the PFRDA |
| x | The National Investment Fund |
| xi | Insurance funds set up and managed by the army, navy or air force |
| xii | Insurance funds set up and managed by the Department of Posts |
| xiii | Systemically important non-banking financial companies |
| xiv | Accredited investors, for the limited purpose of investment in Angel Funds |
Three of these repay a second reading.
Two entries carry their own size test. A provident fund or a pension fund qualifies only with a corpus of at least ₹25 crore. A smaller fund of either kind is outside the category, which places it with the non-institutional investors rather than the institutions.
Foreign portfolio investors are in, with exceptions. The entry excludes individuals, corporate bodies and family offices registered as foreign portfolio investors. Being an FPI is not by itself enough.
The last entry is narrow and recent. Accredited investors were added by a 2025 amendment, and only for the purpose of investing in Angel Funds registered with the Board. This is the one place an individual can appear, and it is limited: it does not make an accredited investor a qualified institutional buyer for allocation in a public issue.
Registration matters in the first entry too. A fund has to be registered with the Board to come within it, which is why a mutual fund scheme you hold is inside the category and an unregistered pooled vehicle is not. The categories those schemes fall into are set out in types of mutual funds.
How much of an issue goes to qualified institutional buyers
Fifty per cent, or seventy-five, depending on the route the company took to market. Regulation 32 sets the allocation for book-built issues, and the share reserved here moves with the regulation the issue is made under rather than with anything the company chooses.
| Book-built issue under | This category | Non-institutional | Retail individual |
|---|---|---|---|
| Regulation 6(1) | Not more than 50% | Not less than 15% | Not less than 35% |
| Regulation 6(2) | Not less than 75% | Not more than 15% | Not more than 10% |
Five per cent of this category’s portion is allocated to mutual funds, and that applies under both routes rather than only the first. It is five per cent of the institutional portion, not of the whole offer, and it sits inside that portion rather than on top of it.
A second proviso matters more to a fund investor than the set-aside does. Beyond that five per cent, mutual funds remain eligible for allocation out of the balance available to qualified institutional buyers. The set-aside is a reserved slice rather than a limit, and like any allocation it depends on valid bids being made at the applicable price.
One thing the regulation does not do is move an unsubscribed institutional portion elsewhere. The proviso that allows an unsubscribed portion to be allocated to another category is written for clauses (a) and (b), the retail and non-institutional portions. It does not extend to clause (c).
The direction of the figure flips between the two routes. In the first it is a ceiling the issue cannot exceed; in the second it is a floor it has to meet. The offer document states which route the issue has taken.
Most of that portion can be spoken for before the issue opens
Up to sixty per cent of it, under Regulation 32(3). The issuer may place that much of this category’s portion with anchor investors before bidding starts, on the conditions set out in Schedule XIII, which means the headline percentage overstates what is actually contested.
That changes what the headline number means. A reader who sees “50% to institutions” may reasonably assume half the offer is contested when the book opens. Where anchors take the maximum, most of that half has already been placed.
Regulation 30(1)(b) attaches a pricing condition in those terms: the price offered to anchor investors “shall not be lower than the price offered to other applicants”. Anchors take part through a separate allocation process ahead of general bidding, on the conditions the regulations prescribe, and the allocation does not promise an allotment to any other applicant in the category.
So the number worth reading in an offer document is not the category’s share alone. It is that share after the anchor allocation, which the issue announces separately. The overall size the percentages apply to is covered on issue size.
The three categories side by side
Three definitions built three different ways. They are not grades of one scale, and the test that places an investor in any of them differs in kind each time: an amount in the first, an exclusion in the second, and a named list in the third.
| Test applied | Which category it produces |
|---|---|
| Does the applicant come within a Regulation 2(1)(ss) entry for the purpose in question? | Yes, and it is a qualified institutional buyer for that purpose. Any condition attached to the entry still applies, and entry (xiv) reaches only Angel Fund investment |
| If not: is the applicant an individual, or an HUF through its Karta, bidding ₹2 lakh or less? | Yes, and it is retail individual |
| If neither | Non-institutional, which takes everyone the first two tests reject |
The anchor mechanism belongs to this category alone. That does not mean the other two are left untouched: each has its own allocation rules, the non-institutional portion is itself split by application size, and Regulation 32 allows an unsubscribed part of one to be allocated to the other.
The third row is the catch-all. In this book-built allocation framework, an otherwise eligible applicant that is neither an individual within the retail limit nor on the institutional list falls there by default, which is where a provident fund below the corpus threshold or an ordinary company ends up.
Common Questions
Qualified Institutional Buyer. The term is defined at Regulation 2(1)(ss) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018, which lists fourteen kinds of entity that come within it.
Entities of the types named in Regulation 2(1)(ss): registered mutual funds, alternative investment funds and foreign venture capital investors, scheduled commercial banks, public financial institutions, IRDAI-registered insurers, state industrial development corporations, systemically important non-banking financial companies, certain foreign portfolio investors, and several specified government and armed forces funds.
Not for a public issue. Almost every entry is an organisation, and an individual bidding above ₹2 lakh is a non-institutional investor however large the application. The single exception is entry (xiv), which covers accredited investors only for investing in Angel Funds registered with the Board.
Yes, where it is registered with the Board. Mutual funds are the first entry in the definition, and Regulation 32 allocates five per cent of this category’s portion to mutual funds under both routes, subject to valid bids. They also stay eligible for allocation from the balance of the institutional portion.
No. A pension fund qualifies only with a minimum corpus of ₹25 crore and registration with the PFRDA. The same ₹25 crore test applies to provident funds. Smaller funds fall outside the category.
In a book-built issue under Regulation 6(1), not more than 50% of the net offer. Under Regulation 6(2), not less than 75%. The percentage is set by regulation, and which one applies depends on the route the issue has taken.
An anchor investor is not a separate category. Anchors are drawn from this category, and the issuer may allocate up to 60% of its portion to them before the issue opens, under Regulation 32(3).
The regulations set the share of the offer each category receives; they do not promise any applicant an allotment. What the institutional share means in a given issue depends on the route, the anchor allocation and the subscription received, all of which the issue discloses.
Disclaimer: The views expressed here are of the author and do not reflect those of Dhanvantree. Mutual funds are subject to market risks, please read the scheme documents carefully before investing.