ASBA: What is ASBA? – ASBA Facility, ASBA Procedure, Who can apply for ASBA?
ASBA (Applications Supported by Blocked Amount) is a process developed by the India’s Stock Market Regulator Securities and Exchange Board of India (SEBI) for applying to IPO. In ASBA, an IPO applicant’s account doesn’t get debited until shares are allotted to them.
ASBA is a supplementary process for applying in public issues floated by the Companies. ASBA can be used for Initial and Follow-on Public Offers (IPO & FPO), Rights Issues, Debt Issues and Mutual Funds. Under ASBA, funds will continue to earn interest during the application processing period. Bank will mark a lien on the deposit account of the investor to the extent of the application money. Lien will be removed immediately after finalization of the basis of allotment. If bid is successful, the shares allotted will be transferred to the applicant’s Demat account.
An Investor can apply through ASBA, provided he/she:
- is from any of the approved category eligible to apply in IPO as per SEBI guidelines.
- is maintaining a Savings Bank or Current Account with any bank.
- is having Demat account with any of the DP along with Permanent Account Number (PAN).
- has sufficient clear credit balance in his/her Savings Bank or Current account for application money.
- A Retail Individual Investor (Individual or HUF Applicant up to Rs 200000/-) can also modify, revise or delete the bid within bidding period.
- All other categories cannot withdraw the application and can modify only upwardly.
- An Investor can make 5 applications from a single deposit account.
ASBA Procedure Explained by National Stock Exchange (NSE):