Application Supported By Blocked Amount

Application Supported by Blocked Amount (ASBA)

Many of you may never heard about ASBA. This is because it is newly introduced system by SEBI in the Indian stock market. So let us talk today about ASBA.

What it means by ASBA? -

ASBA refers to an application mechanism for subscribing to Initial Public Offerings (IPO). This system ensures that the Investor’s money remain in his/her bank account till the shares are allotted.

This system was introduced by SEBI for retail investors in 2008. But now it has been extended to HNIs as well as Institutional Investors from 1st January 2010 onwards.

The mechanism requires the applicant to give an authorisation to block his/her application money in the bank account for subscribing to the IPO. His/her bank account will be debited only after the basis of allotment is finalized or the IPO is withdrawn or failed.

Key Facts about ASBA -

- You cannot subscribe to all IPOs through ASBA. You can only subscribe to book-built public issues and a few selected rights issues through ASBA

- Only certain designated banks – Self certified Syndicate Banks (SCSB) offer this facility to the applicants. The list of such banks and branches can be accessed from the websites of Sebi.gov.in, bseindia.com and nseindia.com

- It is not compulsory to submit bids through this system. You can choose to opt for the existing process of applying through cheques. However, you cannot avail of both modes to send your applications. This will be rejected on the grounds that it constitutes multiple applications

- The applicant can also allowed to withdraw ASBA Bids. During the bidding period, one can approach SCSB, to which he/she had submitted the application and make a withdrawal request, post which the bank will unlock the amount.