ASBA

Application Supported by Blocked Amount

By
Ajmal Roshan E
M.Com 1st Sem
Content

1. IPO
2. Reserved categories of IPO
3. IPO Process
4. ASBA
5. SCSB
6. Benefits of ASBA
IPO
An IPO refers to the process of offering shares of a private corporation to the
public through the stock market.
Public shares issuance allows a company to raise capital from public investors.

Reserved Categories in IPO

1. Qualified Insitutional Buyers
2. Non – Institutional Investors
3. Retail Investors
Qualified Institutional Buyers (QIB)
 QIB refers to the organizations who invest for people for pension funds,
Provident funds, Mutual funds,Insurance firms…etc
 QIB invest with a huge amout of capital
 QIB’s Quota is 50% in IPOs

Non-institutional Investors
 It includes Individual investors and NRIs
 One has to make a bid of more than two lakh rupees.
 15% of the quota is reserved for this category.

Retail Investors
 It refers to common people making a bid in an IPO
 Investors usually make a bid of less than two lakh rupees.
 Minimum 35% quota of quota is reserved for this category.
IPO Precess

Application Allotment Refund

 The Investor doesn’t earn any interest.

 Pressure for the company to repay application money within 15 dday
ASBA ( Applications 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of allotment is finalized, or the issue is withdrawn/failed.
ASBA is stipulated by SEBI and available from most of the banks operating in india

Is it necessary?
Earlier Qualified Institutional Buyers were only allowed to participate in IPOs
through ASBA facility.

Currently as per SEBI guidelines, all three categories of investors making application
in public/right issue shall mandatorily make use of ASBA facility.
SCSB ( Self Certificate Syndicate Bank )
SCSB is a bank through which the applicant can make a ASBA request.
SCSBs are those banks which satisfy the conditions laid by SEBI.

Eg÷ SBI,IDBI Bank, ICICI Bank, Axis Bank, HDFC Bank,Punjab National bank….etc

 SCSBs would accept the applications.

 Verify the application
 Block the fund to the extent of bid payment amount
 Upload the details in the web based bidding system of NSE
 Unblock once basis of allotment is finalized and transfer the amount for
allotted shares to the issuer.
Benefits of ASBA

 The investor need not to pay the application money by cheque.

 The investor does not have to bother about the refunds.
 The customer can revice/ withdraw the bid before the end of the issue in the
prescribed format with the bank.
 The company does not have to bother about repayment of allotment money.