What is ASBA payment method for IPO?

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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there is no refund process for this kind of payment option as only the required money for allocated shares is withdrawn from the investors account. Investor can use the remaining money as soon as the required money is withdrawn and the money gets unlock.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.

ICICIDirect Says:

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Bids placed once can not be revised, but they can be withdrawn while issue is open for subscription.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.

SEBI Says:

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only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.