What is ASBA?

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ASBA abbreviated as Application Supported by Blocked Amount is an IPO application process developed by SEBI. It is an application containing an authorization to block the application money in the bank account, for subscribing to an IPO issue. You cannot use the blocked amount for any purpose. However, you can continue to earn interest in the blocked amount. If you are a non-retail investor wanting to invest in IPO, it is mandatory to apply through ASBA.

As an investor, if you apply through ASBA, your money gets debited from your bank account only if your application is selected for allotment. It is refunded to your bank account if you do not get the IPO issue or the issue has been withdrawn. From 2016 onwards, the SEBI has directed that it is mandatory to fill an ASBA form if you wish to invest in IPO.

Here are some of the eligibility criteria for ASBA:

  • You are an Indian residential investor.
  • You should have a valid PAN number along with a Demat account and trading account.
  • You have to apply through the blocking of funds in the bank account with self-certified Syndicate Banks.
  • You should have adequate balance in your bank account.
  • You should bid at cut off, with a single option of number of shares to bid for.
  • You should not bid under any of the reserved categories.
  • You have agreed to the terms and conditions of not revising a bid.

You can apply for ASBA through both online and offline methods. Here are some of the steps to apply for ASBA:

1. Online ASBA Application

  • Login to your Netbanking account and click on “IPO Application”.
  • You can select the particular IPO you wish to apply for and mention up to 3 bids.
  • Fill the Demat account details and place and confirm your orders.
  • The bidding amount is blocked in your bank account up to the finalization of allotment. However, you will continue to earn interest on it.

2. Offline ASBA Application

  • Download the ASBA form from the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) website.
  • Fill in the required details and submit the form at the Self-certified Syndicate Banks along with the photocopy of required identity proof.
  • Once you submit the application, the bank will send the application details to the stock exchange and block the stipulated bid amount in your bank account.
  • You can check the application status on both BSE and NSE website.

Here are some of the unique benefits for investors applying through ASBA process:

  • When money is blocked in your bank account, you do not lose out on interest income. You continue to earn interest on the blocked amount.
  • The ASBA eliminates the need to pay money via cheques and demand drafts.
  • The ASBA facility is hassle-free and does not involve any cost. You can easily apply via Netbanking without submitting any physical documentation.
  • The investors need not worry about the refunds. In case there is no allotment of shares, the money is unblocked from your bank account for further use.
  • The blocked amount is considered while calculating the Average Quarterly Balance in the account.
  • Do I have a higher chance of getting an IPO if I apply through ASBA?

    • No, the chances of getting allotment are the same for all the applicants whether the application is made through ASBA or non-ASBA.

  • Can my ASBA application form get rejected?

    • Yes, the ASBA application can be rejected under the following circumstances:

    1. If you do not have sufficient balance in your bank account.
    2. If there is a mismatch in your name on the PAN Card with that in your application form or Demat account holder name.
    3. If there are multiple applications by the same investor.
    4. If the information mentioned by you is incorrect.

  • If I apply through ASBA, will my entire bank account will be blocked or only the amount worth the IPO is blocked?

    • No, the entire bank account is not blocked. Only the stipulated amount worth the stocks is blocked. Rest of the balance can be utilized for other purposes.

  • Can I make applications through ASBA in all the issues?

    • Yes, you can make an application through ASBA process in all the issues.

  • What is Self-certified Syndicate Bank in ASBA process?

    • An SCSB is a recognized bank capable of providing Application Supported by Blocked Amount Service (ASBA) to its clients.