What is ASBA and how it is used for making payments for IPO applications?

What is ASBA and how it is used for making payments for IPO applications?

CONCEPT OF ASBA: 

  • ASBA stands for Application Supported by Blocked Amount. It is a process used to apply for Initial Public Offerings (IPOs) or Follow-on Public Offerings (FPOs) in India.
  • Under this process, investors’ application money remains in their bank accounts but is temporarily blocked until the shares are allotted. Once the shares are allotted, the blocked amount is debited from the investor’s account, and the remaining amount is unblocked or released.
  • Investors may submit their ASBA applications to the SCSBs (Self-Certified Syndicate Banks)  (WEB).
  • ASBA is a method of permitting banks to block funds in the customer’s bank account for IPO applications until the allotment process is complete. The process of blocking the funds is called lien marking in banking terms.
  • Investors cannot use the blocked amount but continue to receive interest on the blocked amount.
  • The ASBA route for applying for the IPO is the simplest, fastest, and most convenient way to apply.
  • Amount to be withdrawn or released depends upon the status of the allotment:
  • In case of full allotment: The total blocked amount will be withdrawn.
  • In case of partial allotment, the amount for allotted shares only will be withdrawn; the rest will be released.
  • In case of no allotment: The total funds will be released.

1) Online Application Form for ASBA:

  1. Log in to your net banking account and click on ‘IPO Application’.
  2. Select the specific IPO you wish to invest in and choose UPI as the payment option.
  3. Fill in the application form with the necessary details in the redirected IPO platform.
  4. Fill in important fields such as PAN number, bank account number, and 16-digit DP ID number.
  5. Place and confirm your order.
  6. After your submission is successful, you can check the status on the NSE and BSE websites.

2). Offline Application Process:

  1. Download the application form available from the NSE and BSE websites.
  2. Fill out the details such as name, PAN, DP ID, Demat account number, bank account number, and IFSC.
  3. Submit the duly filled application form at a Self-Certified Syndicate Bank branch.
  4. Collect the stamped acknowledgment receipt.
  5. The bank will block the amount and upload the details on the bidding platform.

3). ASBA Through UPI: