Dear All,
ASBA (Application Supported by Blocked Amounts) is a process developed by the SEBI for applying to an IPO.In ASBA, an IPO applicant's account doesn't get debited until shares are alloted to him. Qualified Institutional Buyers (QIBs) are not allowed to participate in IPOs through ASBA facility. ASBA process facilitates retail individual investors bidding at cut-off, with single option, to apply through Self Certified Syndicate Banks (SCSBs), in which the investors have bank accounts. SCSBs are those banks which satisfy the conditions laid by SEBI. SCSBs would accept the applications, verify the application, block the fund to the extent of bid payment amount, upload the details in the web based bidding system of NSE, unblock once basis of allotment is finalized and transfer the amount for allotted shares, to the issuer. ASBA is an application containing an authorisation to block the application money in the bank account, for subscribing to an issue. If an investor is applying through ASBA, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn / failed. It is a supplementary process of applying in Initial Public Offers (IPO), right issues and Follow on public offers (FPO) made through book building route and co-exists with the current process of using cheque as a mode of payment and submitting applications. One of the advantages of this system is that money is not debited from the bank account till shares are allotted thereby reducing delays in receipt of refunds as well as saving on interest cost for the investors.
For further information refer
http://www.sebi.gov.in/faq/asbaprocess.pdf
CA Rahul Joglekar
Partner
Gokhale & Sathe
Chartered Accountants
302/303, Udyog Mandir No.1,
Bhagoji Keer Marg, Mahim,
Mumbai - 400016, India
+91 22 43484242
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