ASBA means “Application 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allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.
Who are Self Certified Syndicate Banks (SCSBs)?
Self Certified Syndicate Banks are banks which are certified by SEBI, allow retail individual investor to apply in IPO’s using ASBA payment method. These banks have capability to block the IPO Application amount until IPO allotments are done. SCSB guarantee the Issuer Company for the blocked money and make sure that it’s not being used for any other purpose. Now a days all major banks are Self Certified Syndicate Banks.
Detailed procedure of applying in IPO through ASBA.
Under ASBA facility, investors can apply in any public/ rights issues by using their bank account. ASBA form has been integrated to most of the online banks like SBI, ICICI, HDFC etc. Investors shall ensure that the details that are filled in the ASBA form are correct otherwise the form is liable to be rejected
What advantage an investor has in applying through ASBA?
Applying through ASBA facility has the following advantages:
- The investor continues to earn interest on the application money as the same remains in the bank account.
- The investor does not have to bother about refunds, as in ASBA only that much money to the extent required for allotment of securities, is taken from the bank account only when his application is selected for allotment after the basis of allotment is finalized.
It is mandatory for all public issues opening on or after January 01, 2016
How many applications can be made from a bank account?
Five (5) applications can be made from a bank account per issue. It doesn’t mean that an investor can apply/bid 5 lots. But, by using one bank account, investor can apply for different individuals, say wife, son, friend etc. But money for all applications will be deducted from the same account.
Whether my bank account will be blocked or only the amount to the extent of application money is blocked?
No. the entire bank account will not be blocked. Only the amount to the extent of application money authorized in the ASBA will be blocked in the bank account. The balance money, if any, in the account can still be used for other purposes.
How to apply for IPO using ASBA using bank account?
Kindly visit this post to understand the step by step process of IPO applying process from onlinesbi.com