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IPO Investment through
A S B A Facility
So what does ASBA stand for?
The BSE Sensex has already crossed past the
psychological mark of 25000 bringing back ASBA stands for Application Supported by Blocked
the bulls at the centre stage. The week gone Amount (ASBA). In simple terms, it ensures that the
by has already witnessed IPOs of some applicant or the investor’s money remains in his/her
of the leading companies like Thyrocare bank account until the shares are allotted to him/her
Technologies Ltd, Ujjivan Financial Services by the Company.
Ltd and Parag Milk Foods Ltd garnering
renewed interest amongst retail investors Though ASBA was introduced by SEBI for retail
like the yesteryear. As the markets gain investors way back in 2008, however it gains further
momentum, a host of other companies are attention now as it has become compulsory for all
expected to raise capital through primary investors since January, 2016. Further, earlier investors
market route in the coming days. could only go to banks to apply in ASBA mode (except
13 Cities, where Syndicate ASBA was available) unlike
In light of the above, we must know about now where even your financial broker or advisor is
the new mode of applying in IPOs or the mandated to do so.
Application Supported by Blocked Amount
(ASBA) way that has redefined the whole The mechanism requires the applicant to give an
mechanism of working in IPOs. authorization to block his/her application money in
the bank account for subscribing to the IPO. His/her
bank account is debited / funds will be unblocked
only after the basis of allotment is finalised, or the IPO
is withdrawn or fails.
How does ASBA work ?
Under ASBA facility, investors can apply in any
IPO by using their bank account. Investor submits
the ASBA form (available with brokers and banks)
after filling KYC details like name of the applicant,
PAN number, demat account number, bid quantity,
bid price and other relevant details. Further they
are required to mention their bank account number
and bank branch details with their bank signature
thereby authorising their banking branch to block the
application amount in their account.
In turn, the broker/bank uploads the details of the
application in the bidding platform and the forms are
then submitted to authorized branches of respective
banks also called Self Certified Syndicate Banks
(SCSB).
The whole process is hereby explained with the help
of diagram as below:
10 ARIHANT CAPITAL ¡ MAY 2016
