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ASBA --(Applications Supported by Blocked Amount)


ASBA  --(Applications Supported by Blocked Amount)  -- This term is used in relation to purchase of applying for Initital Public Offers. ((IPOs)

ASBA (Applications Supported by Blocked Amount) is a process developed by the India's Stock Market Regulator SEBI for applying to IPO. In ASBA, an IPO applicant's account doesn't get debited until shares are allotted to them.
Earlier Qualified Institutional Buyers were not allowed to participate in IPOs through ASBA facility.[1] Currently as per SEBI guidelines, all three categories of investors, i.e., Retail Investors, Qualified Institutional Buyers, Non-Institutional Investors, making application in public/rights issue shall mandatorily make use of ASBA facility.
ASBA process facilitates retail individual investors bidding at a cut-off, with a single option, to apply through Self Certified Syndicate Banks (SCSBs), in which the investors have bank accounts. SCSBs are those banks which satisfy the conditions laid by SEBI. SCSBs would accept the applications, verify the application, block the fund to the extent of bid payment amount, upload the details in the web based bidding system of NSE, unblock once basis of allotment is finalized and transfer the amount for allotted shares to the issuer.
ASBA means “Applications Supported by Blocked Amount”. ASBA is an application containing an authorization to block the application money in the bank account, for subscribing to an issue. If an investor is applying through ASBA, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.
It is a supplementary process of applying in Initial Public Offers (IPO) and Follow-On Public Offers (FPO) made through Book Buildingroute and co-exists with the current process of using cheque as a mode of payment and submitting applications.
ASBA is stipulated by SEBI, and available from most of the banks operating in India. This allows the investors money to remain with the bank till the shares are allotted after the IPO. Only then does the money transfer out of the investors account to the company. This eliminates the need for refunds on shares not being allotted.
As of December 3, 2012, 52 Banks are acting as SCSBs. Investors may submit their ASBA Applications to these SCSBs in order to apply for Public Issues. The list of SCSBs include the likes of Bank of IndiaAxis BankHDFC BankICICI BankState Bank of IndiaPunjab National BankUCO BankIDBI Bank among others.[2]

source: wikipedia

IPO Application through ASBA

Why choose this product?
  • 1
    The amount remains blocked in your bank account for the IPO application.
  • 2
    Earn interest on the earmarked funds.
  • 3
    The amount is debited only when the shares are allotted to you.
What is the process to apply for an IPO through ASBA Online?
  • Login to your NetBanking Account
  • Click on the link named "IPO Application" under Request on the left side menu.
  • Select one of the IPOs you want to apply for and mention up to 3 bids.
  • Enter your depository details.
  • Place and confirm your Order.
  • You would then be required to accept the "Terms & Conditions" before submitting the bid.

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