IPO through ASBA Process

This article discusses about getting IPOs through ASBA process. Read to know what is ASBA, how to avail the facility, regarding submitting of bids and the benefits of subscribing to ASBA.

What is ASBA?

Capital market regulator SEBI in 2008 has introduced a new mechanism for subscribing to initial public offers (IPO) for retail investors called Application Supported by Blocked Amount (ASBA). This facility is now offered to HNIs and Corporate investors also from January 1, 2010 onwards. In this type of application when an investor subscribes for IPO his/her application money will get blocked in the bank account and is debited only after the basis of allotment is finalized. This new mechanism works well for IPOs and Rights Issue.

All IPOs can be subscribed through ASBA?

Not all IPOs can be subscribed with ASBA mechanism. Only those which are offering book-built public issues and some select few rights issues are eligible under the ASBA mechanism.

How to avail ASBA facility?

Self-Certified Syndicate Banks (SCSB) is currently offering this facility to the Investors. You can visit SEBI website or BSE or NSE website to get the list of banks and their branches that are offering ASBA facility. The application can be filled by filling the form offline or online having internet banking facility in which the amount will get blocked as per the application amount.

Submitting bids through ASBA is compulsory?

It is not compulsory to submit bids through this submit. You can still submit the form and give cheque for subscribing IPO. But you can not avail both processes like cheque and ASBA method; in this case it will be considered as multiple applications and your application will get rejected.

What is the benefit of subscribing from ASBA?

There are many benefits of applying for IPO in ASBA method; the first and most important is your money is not debited from your account so you are not losing on the interest that earned during that period; second there is a transparency in share allotment process; only that amount is debited from account after the basis of allotment is completed. So there is no waiting for refund of money and no such tensions.

Is withdrawal possible in ASBA bids?

You can withdraw your bid. Once the withdrawal request is sent to SCSB bank the amount blocked will get unblocked.


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