Application

Supported by
Blocked Amount
(ASBA)

Introduction to Financial Market

Introduction

– ASBA full form is Application Supported by Blocked Amount

– It was introduced in 2008 by SEBI.
– This is an application mechanism which completely eliminates the need
for refunds in the case of partial allotment and no allotment. ASBA
allows the investors money to remain with the bank till the shares are
allotted after the IPO. The funds are transferred after the allotment and
to the extent of allotted shares.
– In June 2015, SEBI made it mandatory for all IPO applications to be made
through ASBA mechanism with effect from 1 January 2016.
What is Self Certified Syndicate
Bank?
– The banks which are certified with SEBI, offering services in relation to
ASBA known as 'Self Certified Syndicate Banks or SCSB(s).
– They allow the retail individual investor to apply in IPO's using ASBA
payment method.
– A list of Self Certified Syndicate Banks (SCSBs), which is updated regularly,
can be found on SEBI website.
– As on today , there are 67 banks registered with SEBI to act as SCSBs.
– For eg- SBI bank, ICICI bank, HDFC bank, YES bank, AXIS bank, etc.
– It is important to note that all banks do not offer this facility.
Who are eligible to apply through
ASBA?
– SEBI has been specifying the investors who can apply through ASBA
– Initially, QIBs were not allowed to participate in IPOs through ASBA facility;
however, with effect from May 2010, investors in all categories were allowed to 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.
Annexure II
Features

– The amount held in the account of the customer would continue to earn interest as
applicable to the account.
– Any withdrawals or debits to the extent of blocked amount are not permitted in the
account till the finalisation of allotment of shares. However, balance in the account
over and above the blocked amount is free from any charge.
The applicants can cancel, revise or modify the bid within the bidding period.
– Facility to apply through Internet without the necessity of visiting the branch.
– Since November 01, 2011, SEBI has prescribed a single form for ASBA as well as
non-ASBA applications.
– ASBA is applicable in book-built as well as fixed price issues. This means SME
IPOs are also supported by ASBA facility. Investors can find ASBA option in
some rights issues as well.
Benefits

– No issue of Cheque/ Purchase of DDs and hence no clearing

– Applicant can make 5 applications from a single deposit account
– Money lies in the a/c and earns interest
– Lien marked only to the extent of the bid amount
– Money to be appropriated on allotment to the extent of shares allotted
– No physical refund involved, no hassles of lost / delayed refunds
– Shorter turnaround time for entire IPO processing.
– The investor deals with the known intermediary i.e. its own bank.
 Differences between Existing and New Method:
Existing Method
– Submission of bid is through the investor’s brokerage firm
– Payment is done through the cheque and to be submitted
along with application.
– Here, the investor earns no interest
– Here, the company will have to refund the amount to the
investor within the time limit.
– As company can not list its share before entire process of
issue is completed including refund, which delays the
listing
New Method
– Through the SEBI registered bankers.
– It is not necessary to make payment at the
time of submitting of bid. However, the banker
will simply block the amount at the time of
uploading the details in the bidding platform.
– Here, the investor continues to earn interest as
the amount is with the banker.
– No question of refund
– As there is no question of refunding, so it
causes no delay for listing
 THANK YOU

ANUKRUTI CHATURVEDI (1934)