What It Means
A QIB (Qualified Institutional Buyer) is a SEBI-defined category of large institutional investors — mutual funds, banks, insurance companies, foreign portfolio investors — that get a reserved allotment quota in IPOs, separate from the retail investor category.
How It Works
SEBI mandates that a fixed portion of most IPO shares be reserved specifically for QIBs (commonly 50% for larger issues), with the remainder split between non-institutional investors and retail investors. QIBs are treated differently because they're presumed to have the resources and expertise to evaluate a company's prospectus in depth, unlike a typical retail applicant. Strong QIB demand during an IPO's bidding window is often watched by retail investors as a signal — heavy institutional interest can suggest the offering is well-regarded, though it's not a guarantee of post-listing performance.