ASBA or Applications Supported by Blocked Amount is a process developed by the stock market regulator Securities Exchange Board of India (SEBI). This was launched to simplify the process of applying to Initial Public Offerings (IPO), debt issues, rights issue, Follow-on Public offerings etc.
Here’s what you need to know about this process.
What is ASBA?
This is an application form that contains an authorisation to block your application money in your bank account when you subscribe to an issue. Once you apply using ASBA, your application money will be debited from your bank account only if your application is selected for allotment. Note that your application will be selected for allotment after the basis of allotment is finalised. In simple words, the amount will not be debited from your bank account unless shares are allotted in your name.
Will your entire bank account be blocked or only the application money is blocked?
The entire bank account will not be blocked. Only the application money as authorised by you on the ASBA form will be blocked. You can use the balance money, if any, in your account whenever you want. Following a successful bid, your account will get debited and the allotted shares will be transferred by the company to your demat account.
Who can use the ASBA facility?
All investors who are applying for a public issue can use the ASBA facility. For rights issues, all the shareholders of the company are permitted to use ASBA for making applications provided they fulfil the following conditions.
• Applicants should be shareholders as on the record date
• They should be holding shares in dematerialised form
• They should have applied for entitlements or additional shares in the rights issue in dematerialised form
• Applicants shouldn’t have renounced their entitlements in full or in part
• An applicant can’t be a renounce
• They should apply through blocking of funds in a bank account that is with the SCSB (Self Certified Syndicate Bank; SCSB is a bank which offers the facility of applying through the ASBA process.)
What are the advantages of using ASBA
The benefits of using ASBA are:
(i) You don’t need to issue cheques for paying your application money.
(ii) You continue to earn interest on the IPO application money as the money remains in your bank account.
(iii) You do not have to bother about refunds as the money is taken from your bank account only when your application is selected for allotment after the basis of allotment is finalised.
(iv) You deal with a known intermediary which is your bank. So, no worries about brokers or unknown agents.
How to apply for an IPO through ASBA?
Using the ASBA facility, you can apply for any public/ rights issues. You will need your bank account for this. The first step is to fill the details on the ASBA form. These include your name, PAN number, demat account number, bid quantity, bid price and other relevant details. ASBA forms will be available at the designated branches of the banks acting as Self Certified Syndicate Banks (SCSB). SCSB are banks that are recognised as banks that are capable of providing ASBA services to their customers. The names of the banks will appear in the list available on SEBI’s website. You can get the list from the National Stock Exchange (NSE) website too.
The next step is to submit the ASBA form to your banking branch by giving instructions to block the IPO amount in your account. The bank will then upload the details of the application form on the IPO bidding platform. Note that you need to ensure the details that are filled in the ASBA form are correct. If not, the form is liable to be rejected.
Where to get the ASBA forms online?
You can generate the ASBA e-form from the NSE website for any issue. The form is available on the Book Running Lead Manager’s (BRLM) website too.
Can you submit the ASBA form to any of the SCSBs?
No. You will need to submit the ASBA form to the SCSB with which you are holding your bank account.
If you have a bank account with a branch, can you submit the IPO application through ASBA at another branch?
Yes. You can submit the ASBA form to another branch provided your bank has core banking facility. The branch has to be identified as a designated branch by your bank too.
Do you need to have a Depository Participant (DP) account with the SCSB to which you submit the ASBA?
No. You don’t need to necessarily have your DP account with the SCSB. You can have the account with your broker.
Can you submit the ASBA form to your broker?
Are only physical ASBA forms accepted?
No. You can either fill up the physical form and submit it to the SCSB or apply online using the internet banking facility/online facility provided by your bank.
Can you revise or modify the bid?
SEBI allows retail investors to modify, revise or delete the bid within the subscription period. However, if you are a qualified institutional buyer (QIB) and non-institutional investor (NII), you can’t withdraw the bid. However, you can use the deletion facility.
If you withdraw the bid made using ASBA, will your bank account be unblocked immediately?
If you make the withdrawal during the bidding period, the SCSB will delete the bid and unblock the application money. You can use the amount once it is unblocked.
If you make the withdrawal after the bid closure date, the SCSB will be able to unblock the application money only after getting the required instructions from the registrar. The registrar will give these instructions only after the finalisation of the issue’s basis of allotment.
Will I get the acknowledgement of receipt for applications submitted through ASBA?
Yes. The SCSB/Trading member shall give a counterfoil as an acknowledgement at the time of submission of ASBA and also the order number, generated at the time of uploading the application details, if sought by the investors in case of need.
What happens when the IPO issue fails/is withdrawn?
If the IPO is withdrawn or it fails, the SCSB will unblock your application money from your bank account after receiving instructions from the registrar.
How many ASBA applications can you make?
SEBI allows investors to make only 5 ASBA forms using a single bank account. However, for debt issues, you can submit multiple ASBA forms.
What if your application gets rejected for wrong details despite you filling the correct details?
If your ASBA is rejected, you need to approach the concerned SCSB for complaints. The SCSB has to give you a reply within 15 days. Not satisfied with the reply provided by your bank? You may write to SEBI at this address – Investor Grievance Cell, Office of Investor Assistance and Education, Securities and Exchange Board of India, Plot No.C4‐A,’G’ Block, Bandra Kurla Complex, Bandra(East), Mumbai – 400051. You could call them at 022‐26449000 / 40459000 or fax them at 022‐26449016‐20 / 40459016‐20 16.
Who will be responsible for errors in the data uploaded?
If the data provided by you is wrong you will be held responsible. However, if you provided the correct data but your SCSB or broker made errors while entering the data in the electronic bidding system of the stock exchanges, they will be responsible.