ASBA facility
Application Supported by Blocked Amount(ASBA) is a facility wherein the money you intend to invest in an NFO stays in your bank account and consequently earns you the interest. The money leaves your account only when units are allocated to you. While in your account, this amount stays blocked ensuring that you cannot use it for any other purpose.
Procedure of applying in IPO through ASBA
Under ASBA facility, investors can apply in any public/ rights issues by using their bank account. Investor submits the ASBA form (available at the designated branches of the banks acting as SCSB) after filling the details like name of the applicant, PAN number, demat account number, bid quantity, bid price and other relevant details, to their banking branch by giving an instruction to block the amount in their account. In turn, the bank will upload the details of the application in the bidding platform. Investors shall ensure that the details that are filled in the ASBA form are correct otherwise the form is liable to be rejected.
Can I make application through ASBA facility in all issues?
Yes, you can make application through ASBA facility in all the issues i.e. public and rights.
Who can apply through ASBA facility?
SEBI has been specifying the investors who can apply through ASBA. In public issues w.e.f. May 1, 2010 all the investors can apply through ASBA. In rights issues, all shareholders of the company as on record date are permitted to use ASBA for making applications provided he/she/it -
a. is holding shares in dematerialized form and has applied for entitlements or additional shares in the issue in dematerialised form;
b. has not renounced its entitlements in full or in part;
c. is not a renouncee;
d. who is applying through blocking of funds in a bank account with the Self Certified Syndicate Bank.
What advantage an investor has in applying through ASBA vis‐à‐vis applying through an application with a cheque?
Applying through ASBA facility has the following advantages -
(i) The investor need not pay the application money by cheque rather the investor submits ASBA which accompanies an authorization to block the bank account to the extent of the application money.
(ii) 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.
(iii) The investor continues to earn interest on the application money as the same remains in the bank account, which is not the case in other modes of payment.
(iv) The application form is simpler.
(v) The investor deals with the known intermediary i.e. its own bank.
Where should I submit my Application Supported by Blocked Amount (ASBA)? How shall I know which bank and which branch of that bank is the designated branch for accepting ASBA applications?
List of Self Certified Syndicate Banks (SCSBs) and their designed branches i.e. branches where ASBA application form can be submitted, is available on the websites of BSE (www.bseindia.com) and NSE (www.nseindia.com) and on the website of SEBI (www.sebi.gov.in). The list of SCSB would also be given in the ASBA application form.
What is Self certified Syndicate Bank (SCSB)?
SCSB is a bank which is recognized as a bank capable of providing ASBA services to its customers. Names of such banks would appear in the list available on the website of SEBI.
Can I submit ASBA in any of the banks specified in the list of SCSBs?
No, ASBA can be submitted to the SCSB with which the investor is holding the bank account.
How many applications can be made from a bank account?
Five (5) applications can be made from a bank account per issue.
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.
Will there be any different treatment in allotment for ASBA and Non –ASBA forms?
No. ASBA forms will be treated similar to the non‐ASBA forms while finalizing the basis of allotment.
Is there a better chance of allotment if one applies in IPO through ASBA?
The chance of getting allotment is same for all the applicants whether application is made through ASBA or non‐ASBA.
