ASBA & how it helps investors applying for IPO?
ASBA is Application Supported by Blocked Amount, a new investor-friendly way to apply for initial public offerings (IPOs). ASBA is an interface for banks to participate in the process of IPO payments as proposed by the capital markets regulator, the Securities and Exchange Board of India (SEBI).
The main objectives of ASBA:
- Ensures an investor’s funds leave his bank account only on allotment of shares in public issues.
- Earns interest on application money while in bank account.
- No refund hassles as amount leaves bank account only when the shares are allotted.
- Also ensures that only the required amount of funds is debited to the investor’s bank account on allotment of shares.
The banks participating in an IPO process can upload the bids with respect to their customers into the electronic books of BSE and NSE. The interface facilitates not only the controlling branch but also the designated branches of the banks to directly upload the bids into the electronic books.
ASBA is stipulated by SEBI and is available from a few banks.