ASBA- Welcome step for IPO Investors

Gone are the days when IPO investors had to worry about getting back their refunds in time and loosing on the interest income for the money they invested in the IPO during the period from application to getting back the refund. SEBI has introduced the mechanism of ASBA which would act as a right step in providing relief to the IPO investors from worries of delay in refunds and loss of interest income.


What is ASBA ?

asba 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only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.

To put it in more simpler words, when you apply for an IPO now,  you don’t have to pay the amount upfront. You just give an instruction to the bank to block the amount in your bank account to the extent of your application amount. So you don’t pay anything to the company. The application amount remains in your bank account and you continue to earn interest on it . The hold will be released once the allotment is made by the company. If you have got allotment, the amount to the extent of shares allotted would be debited to your account and the hold on balance of amount would be released. You cannot withdraw the amount of money blocked against an IPO application till the blocked amount is released on allotment/refund.

Currently the facility is available only to IPO’s with Book Building route. SEBI has issued a list of Self Certified Syndicate Banks (SCSB) who are authorized to accept ASAB application forms. Currently 10 banks have enrolled for providing this facility. Others are expected to enroll soon.

For those who apply for IPO through Online trading and their Banks are classified as SCSB, the option of applying through ASBA has been activated by default so you don’t need to take any additional steps.

Detailed Guideline from SEBI

List of SCSB’s


Ashish Kumar said...

This is realy a good step for Investors in IPO's.

anil said...

Hi Rajesh,
Is there a separate application form to apply through this mode ? Can we revise the bid after submitting the application? What is the process for same?

Rajesh Soni said...

Hi Ashsih,
I agree with you that this is a good step taken in Investor interest.

Rajesh Soni said...

Hi Anil,

Yes, there is a separate application form to be filled for opting for ASBA mode.

Yes, you can revise the bid thorugh this mode also. You can read the process in detail from the link that I have given in my post.

Anonymous said...

Which is next IPO coming ?


I never been a big fan of new issues. Theirs a few good ones but not many.

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