ASBA – the new investor friendly way to apply for IPOs

In its tradition of constantly providing innovative and investor friendly services, Bombay Stock Exchange Ltd. (BSE) has developed an interface for the banks to participate in the ASBA (Application Supported by Blocked Amounts) process. This new initiative is in the area of IPO payments as proposed by the capital markets regulator, Securities and Exchange Board of India (SEBI).

The objective of introducing ASBA is to ensure that the investor’s funds leave his bank account only upon allocation of shares in public issues. The ASBA process also ensures that only the requisite amount of funds are debited to the investor’s bank account on allotment of shares. In this mechanism, the need for refunds is completely obviated.

Using this interface the banks, participating in the IPO process would be able to upload the bids with respect to their customers, into the electronic book of BSE. The interface facilitates not only the controlling branch but also the designated branches of the banks to directly upload the bids into the electronic book at BSE. The ASBA application has been successfully tested with eleven banks.

SEBI vide its circular no. SEBI/CFD/DIL/DIP/31/2008/30/7 (July 30, 2008) introduced a supplementary process of applying in public issues, viz., the “Applications Supported by Blocked Amount (ASBA)” process.

The ASBA process shall be available in all public issues made through the book building route.

The main features of ASBA process are as follows:

  1. Meaning of ASBA: ASBA is an application for subscribing to an issue, containing an authorisation to block the application money in a bank account.
  2. Self Certified Syndicate Bank (SCSB): SCSB is a bank which offers the facility of applying through the ASBA process.

For more details on the ASBA process, please refer to the SEBI circular mentioned above.

The list of SCSBs are as below. For details of designated branches click on respective banks below: