Investing in an Initial Public Offering can be thrilling yet complicated. This process has become much more efficient and investor-friendly with the introduction of the ‘Application Supported by Blocked Amount’ by SEBI. The earlier days of transferring funds beforehand, followed by waiting for refunds in case of no allotment, are over. ASBA allows you to lock up the funds for the current IPO application but keeps it in your bank account. But what is ASBA, and how do you use it to apply for an IPO? This guide will guide you through everything you need to know. 

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What is ASBA?

Application Supported by Blocked Amount is a mechanism introduced by the SEBI to make applying for an Initial Public Offering seamless. Under ASBA, instead of funds being transferred to the company issuing the IPO, the amount required is blocked in your bank account until the shares are allotted. SEBI enforced ASBA mandatory for all IPO applications in 2016, enhancing transparency and efficiency.

Eligibility to Apply for an IPO through ASBA

You need to meet the following criteria:

Indian Citizenship: You should be an Indian resident investor.

  • Valid PAN Card: You must possess a Permanent Account Number (PAN).
  • Demat and Trading Account: You will need an active Demat account and an online trading account to receive the shares allotted to you.
  • SCSB Bank Account: You will need a Self-Certified Syndicate Bank or SCSB Account to submit your IPO application.
  • Sufficient Funds: Your bank balance must be enough to pay off the IPO bid amount.

Additional Guidelines:

  • You can place a maximum of three bids per IPO.
  • If bidding at the cut-off price, you must mention the quantity of shares.
  • Retail investors (investing up to ₹2 lakhs) cannot revise their bids after submission.
  • You cannot apply under reserved categories like employees or policyholders if applying through ASBA.

Self-Certified Syndicate Bank (SCSB)

A self-certified syndicate bank (SCSB) is a commercial bank registered with SEBI that provides ASBA services. These banks provide a service for IPO applications by blocking the funds of the investor’s account without transferring the amount in advance. A comprehensive list of SCSBs is provided on SEBI’s website.

Some of the prominent SCSBs in India are as follows:

  • State Bank of India
  • HDFC Bank
  • ICICI Bank
  • Kotak Mahindra Bank
  • Axis Bank
  • Punjab National Bank

Make sure your bank supports ASBA services for IPO applications before applying.

Procedure to Submit Your IPO Application through ASBA

Investors can apply for an Initial Public Offering through ASBA in two ways: online via net banking or offline via a physical application.

Online Application Process

  1. Log in with your Credentials: Visit your SCSB bank’s net banking portal and sign in.
  2. Locate the Relevant Section: Look for the ‘Demat Services’ or ‘IPO Application’ tab.
  3. Select IPO: Choose the IPO you wish to apply for from the list of open issues.
  4. Enter Bid Details: Fill in the lot size, bid price, and demat account details.
  5. Approve Mandate Request: Once submitted, approve the UPI mandate request to block funds.
  6. Application Confirmation: The bank generates an Application ID, and the amount remains blocked until the allotment. If you do not get the allotment, the funds are automatically unblocked.

Offline Application Process

  1. Download ASBA Form: Obtain the IPO ASBA application form from the NSE or BSE website.
  2. Fill Out the Form: Enter your demat account number, bid details, and bank account information.
  3. Submit it at a Bank Branch: Visit your SCSB bank’s nearest branch and submit the form and a cheque for the bid amount.
  4. Bank Processes the Application: The bank verifies and uploads your application on the IPO bidding platform.
  5. Funds are Blocked: The amount remains locked until IPO allotment. If shares are not allotted, the amount is released.

Ensure accuracy in your application, as incorrect details may lead to rejection.

Advantages of Applying through ASBA

This particular process for submitting IPO applications offers several advantages:

  • Hassle-Free Process: It simplifies investing by allowing you to apply for an initial public offering directly from your bank account with just a few clicks.
  • No Loss of Interest: Your funds remain in your savings account, and you continue to earn interest on the blocked amount.
  • Paperless & KYC Compliant: The entire process is digital, eliminating paperwork. Your bank’s KYC verification is sufficient for IPO applications.
  • Zero Processing Fees: ASBA services are completely free. There are no brokerage fees or hidden charges.
  • Quick Refunds & Money Security: If you do not receive an allotment, funds are released immediately. The IPO issuer cannot access your money until you receive the allotted shares in your demat account.

Conclusion

ASBA has been a game-changer for investors. It has made the IPO application process more transparent and efficient. It allows you to apply with ease and avoid refund delays. All types of investors agree that ASBA is the best way to apply for an IPO. Find a bank that offers these services and set up a Demat account to bid for your preferred IPO.

FAQs

1. What is the advantage of ASBA in an IPO?

ASBA enables your money to stay in your bank account and only be blocked for the IPO application. This way, you keep earning interest on the amount till the allotment of shares.

2. Is ASBA mandatory for all IPO applications?

SEBI made it compulsory for all investors since 2016 to streamline the process. This eliminates the long wait for refunds and enhances transparency in investments.

3. How can I check if my bank supports ASBA?

You may refer to the SEBI website for a complete list of financial institutions that offer these services in India. You can also check with your bank’s website or customer service to see whether they provide ASBA services.

4. Can I withdraw my IPO application through ASBA?

Yes, you need to submit a request through your bank or broker to withdraw from the IPO application before the final allotment. Blocked funds are released instantly into your account as soon as the application is withdrawn.

5. What happens if I do not receive an IPO allotment?

If no shares are allotted, the amount is automatically unblocked by your bank. You can then use those funds without any delays or additional steps.