Your bank unblocks the funds after the allotment of shares. However, sometimes banks will unblock the funds only after the mandate end date. You can check the mandate end date by visiting kite.zerodha.com/bids/ipo and clicking on the IPO.
Example scenario
The allotment date for National Stock Exchange (NSE) is 22 September 2026. If you do not receive the allotment, your funds will be unblocked after the refund initiation date, i.e., 23 September 2026.
You should request your bank to release the funds if you were not allotted shares anytime after the allotment date. As your funds are only blocked and still remain in your bank account, interest will accrue as usual.