The term ASBA has been used a lot recently in the string of IPOs that are launched in 2022. Application to IPO through ASBA and eligibility for ASBA are some of the vital points that investors had to go through to apply for their target IPO. But what is the meaning of this term and why is it so relevant in an IPO? Given here are the answers to these questions and other key details related to ASBA.
Read More: T+1 settlement for Indian equities- all that you should know
ASBA stands for “Application Supported by Blocked Amount.” This facility is provided by banks to investors for applying to public issues (such as initial public offerings or IPOs). Under this system, the application money for the IPO is blocked in the investor’s account and is not debited until the allotment of shares. This process ensures that the funds are available to the issuer (the company issuing the shares) only at the time of allotment of shares. This process is used to avoid refund of application money in case the shares not allotted to the applier.
The eligibility for ASBA is as per the guidelines of SEBI. The eligibility for individuals to qualify for ASBA are
Investors have the option to apply for an IPO through ASBA using the online or offline process. The details of the same are given here.
The online process has greatly simplified the IPO application process for retail investors. The steps involved in this process are mentioned hereunder.
The offline process is the traditional mode for applying for an IPO through ASBA and is given here.
Small investors investing up to Rs. 2,00,00 can also apply for an IPO through UPI now. The process for the same is given here.
There are multiple benefits to using ASBA and the process has become quite popular over the years. A few benefits of using ASBA for applying in an IPO or FPO are given here.
ASBA is a simple process that has streamlined the process of investing in IPOs. This process is instrumental in securing the investor’s funds and ensuring that they get hassle-free refunds in case of non-allotment. Based on the multiple benefits of using ASBA, the regulator SEBI made it mandatory for all IPOs in 2016.
No. IPO Application through ASBA can only be made the SCSB where the investors have their bank account.
Yes, there are several reasons for the rejection of an IPO application through ASBA. some of such reasons are mentioned below.
When the investor does not have sufficient funds in their account.
When there are multiple applications through a single PAN number.
When the investor has furnished incorrect details in their IPO application form.
When there is a discrepancy in the name mentioned in the DEamt account and the PAN card of the applicant.
An investor can submit a maximum of 3 bids through ASBA.
In case the IPO is withdrawn, the funds blocked as application money under ASBA are released at the instruction received from the Registrar.
This Diwali, we present a portfolio that reflect both sector-specific and stock-specific opportunities. With 2…
Thank you for showing interest in taking a BTST position using our Delivery Plus product.…
Thank you for showing interest in the consultation on trading strategies! Our expert will reach…
Even if you are a new participant in the stock market, the process of buying…
A company’s debt position can be gauged using the interest coverage ratio or ICR. This…
Muhurat Trading, a cherished tradition in the Indian stock market, takes place on Diwali, the…