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Explore the concept of ASBA with its regulatory insights to enjoy safety and liquidity when subscribing to an IPO
Participating in Initial Public Offerings (IPOs) is a popular way to become shareholders in a company before it is listed on the secondary market. However, the process of applying for an IPO involves specific formalities and mechanisms for handling funds.
To make this process secure and investor-friendly, the Securities and Exchange Board of India (SEBI) introduced a system called Application Supported by Blocked Amount (ASBA).
ASBA simplifies IPO applications by allowing you to authorise your bank to block the required funds instead of transferring them upfront. This mechanism brings convenience, safety, and efficiency to your IPO investment journey.
It is mandatory for retail individual investors to apply through ASBA for all public issues, which include IPOs, Follow-on Public Offers (FPOs), and Rights Issues. ASBA ensures transparency, allowing you to monitor your application status and funds. Refunds are also automatic in case shares are not allotted to you.
Understanding the process can help you apply for IPOs with more confidence. Here is a step-by-step overview of how the ASBA system works:
Log in to your bank's online portal or collect an ASBA form. This process can only be done via authorised banks, also known as Self-Certified Syndicate Banks (SCSBs). Choose the IPO you wish to invest in.
Enter your PAN, demat account number, bid quantity, bid price, and other relevant details.
When you submit your application, you authorise the bank to block the amount in your account. This ensures that the money remains untouched until allotment.
The bank uploads your application to the stock exchange bidding platform.
If you receive an allotment, the blocked amount is debited. If not, the amount is released.
As the funds remain in your bank account, you continue earning interest on the blocked amount until it is debited.
Since the funds are only blocked and not transferred, there is no need for a refund process in case of non-allotment.
You can monitor your blocked funds and application status via your bank account or net banking portal.
ASBA is backed by SEBI regulations, ensuring transparency and security throughout the process.
For online users, the process is fully digital and integrated into net banking interfaces.
To leverage the benefits of ASBA, you need to meet specific requirements set forth by SEBI. While all investors investing in public issues can apply through ASBA, for rights issues, you need to:
Hold shares in dematerialised form and have had applied for the entitlements
Have not denounced entitlements
Be a renouncee
At the time of investing, you will need to submit the following details:
DP ID and Client ID
PAN
Bank account number
Bid quantity
You can check your application status through the following channels:
Bank’s Net Banking Portal: Under the ‘IPO’ or ‘Investment’ section
Registrar Website: Enter PAN, application number, or demat account number
BSE/NSE Platforms: Track status using your application credentials
Ensure your details are correctly entered to avoid any errors in tracking your application.
SCSBs play a critical role in the ASBA ecosystem. These are banks authorised by SEBI to:
Accept ASBA applications
Block the IPO application amount in the applicant’s bank account
Upload bidding data to the stock exchanges
Debit the account upon allotment of shares
You can find the list of SCSBs on the official website of SEBI. Access the list from https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=35.
Despite its simplicity, you may make certain mistakes that can lead to rejection of your bids and missed investment opportunities. Be mindful of the following:
Incorrect PAN or Demat Details: Double-check your details to avoid rejection
Insufficient Account Balance: Ensure you have enough funds to cover your bid
Late Submission: Submit your application within the bidding window
Multiple Applications from the Same PAN: This may result in the rejection of all bids
Using Non-SCSB Banks: Not all banks are SCSBs, so check the official list
Understanding the key differences between these two application methods is crucial to making informed decisions and navigating the IPO market effectively. Check out the key distinctions below:
Feature |
ASBA Application |
Non-ASBA Application |
|---|---|---|
Fund Handling |
Amount is blocked in bank account |
Amount is debited upfront and refunded later |
Interest on Funds |
Earned during block period |
Not applicable |
Refund Process |
Not needed |
Required if shares not allotted |
Regulatory Requirement |
Mandatory for retail investors |
No longer valid for retail investors |
Ease of Use |
Online/offline options through SCSBs |
Mostly offline and legacy process |
ASBA has streamlined the IPO application process. With continued access to funds, interest accrual, and no refund hassles, ASBA empowers you to participate in primary markets confidently and efficiently.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
SEBI ASBA Guidelines
NSE IPO Process Overview
BSE IPO FAQs
SCSB List on SEBI Portal
Yes, SEBI has made ASBA mandatory for all retail individual investors applying for IPOs.
You can check your application status via your bank’s net banking portal, the registrar’s website, or the exchange platform using your PAN or application number.
The blocked amount remains in your bank account. If no allotment is made, the bank will unblock the amount without any need for refund processing.
Yes, NRIs can apply using ASBA if they have an NRE/NRO account with an SCSB and a Demat account.
No, you can use your existing bank account if it belongs to an SCSB and has a sufficient balance.
