Introduced in July 2008, Applications Supported by Blocked Amount (ASBA) Process, is the alternative payment method (optional) for IPO application where the IPO bidding amount remains in investors account, but blocked by the bank until allotment is done.
This is an addition method of payment, available exclusively for retail individual investors through participatory banks (SCSB's).
The purpose of adding this new payment option is to reduce the turn around time for IPO Stock listing and to make the refund process faster.
Technically there is no refund process for this kind of payment option as only the required money for allocated shares is withdrawn from the investors account. Investor can use the remaining money as soon as the required money is withdrawn and the money gets unlock.
As companies cannot list there shares before completing the refund process, ASBA will reduce there load on refund process and ultimately will make the listing process faster.
ASBA stands for "Applications Supported by Blocked Accounts". At the time of bidding, invesrtors account is blocked to the extent of the bid amount and debited only at the time of allotment. This facility is being offered by ICICIDirect in affiliation with ICICI Bank Limited.
In other payment options, the bid amount is debited when investors bid application is placed with the stock exchanges. Under the ASBA process, the amount will be debited from your bank account to the extent of successful allotment at the time of allotment. Until such allotment, the amount will remain blocked in investors bank account.
Bids placed once can not be revised, but they can be withdrawn while issue is open for subscription. As soon as the big get cancelled, money gets unlocked and available to the investor.
Following are the basic requirements for applying through ASBA payment mode:
- Only retail individual investors have ASBA facility at this time.
- The bank where investor has account should be a ‘Self Certified Syndicate Banks (SCSBs). The list of the SCSB's will be available soon on SEBI's website. For more detail about SESB's, read the questions below.
- An investor can only apply at cut-off price. Once submitted the bids cannot be revised. Investors are allowed to withdraw the application before issue gets close.
- The application amount (total bid amount) for IPO application will remain locked until allotment is done. An investor cannot withdraw the money in locking period.
Banks which are certified by SEBI, allow retail individual investor to apply in IPO's using ASBA payment method, are known as ‘Self Certified Syndicate Banks (SCSBs)'.
SCSB's has capability to block the IPO Application amount until IPO allotments are done. SCSB guarantee the Issuer Company for the blocked money and make sure that it's not being used for any other purpose.
Bids can be submitted online through internet banking websites or by visiting the branch office of the bank. All branches of the bank may not participate in ASBA process. Visit your local branch to see if it has ASBA facility to apply in IPO's.
Once receiving the IPO Application from an investor, SCSB's sends the bidding information to BSE/NSE electronically.
After allotment, Issue Company or the registrar of the IPO withdraw the required money from the bank account and unlock the remaining amount for investor to use immediately.
On August 28, 2008 SEBI approved Corporation Bank, Union Bank of India and HDFC Bank as Self Certified Syndicate Banks (SCSBs).
Full list of banks approved by SEBI for ASBA IPO Payment Option. (Updated on Aug 04, 2009)
To apply in an IPO using ASBA payment method, an investor should have account with SCSB.
Even if your bank is listed as SCSB, only few of its branches may have ability to process IPO Applications with ASBA payment option. Please contact your nearest branch to check if they have this facility available.
Bank will need the money in investor's account at the time of placing the bid for IPO shares through ASBA payment option. SEBI has clearly instructed that banks will not accept IPO application before blocking the bidding amount (for ASBA process).
The amount will remain locked until registrar / stock exchange request bank to release the fund either because the investor didn't receive the allotment, IPO application got rejected or investor withdraw the IPO application.
In the current form of ASBA, retail individual investors can only apply at cut-off price to use ASBA payment option.
An investor can withdraw the application just like they do it in other payment options. Once withdraw, the blocked amount will be available in 1 working day.