ASBA AS AN IPO Free essay! Download now
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ASBA AS AN IPO
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| Words: 1815 | Submitted: 31-Mar-2015
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DescriptionIt is about how ASBA helps the companies as well as the investors who come out with an IPO.
Application Supported By Blocked Amount (ASBA) As An IPO
ASBA means "Applications Supported by Blocked Amount". ASBA is a process developed by the India's Stock Market Regulator SEBI for applying to IPO. In the Non-ASBA IPO process, the bid amount (application money) is debited from the bank account once the bid application is successfully placed. Under the ASBA IPO process, the amount is not debited from your bank account until successful allotment. Until such allotment, the amount will remain blocked in your bank account. As of December 3, 2012, 52 Banks are acting as SCSBs. Investors may submit their ASBA Applications to these SCSBs in order to apply for Public Issues. The list of SCSBs includes like Axis Bank, HDFC Bank, ICICI Bank, State Bank of India, Punjab National Bank, UCO Bank, IDBI Bank among others.
ASBA means “Application Supported by Blocked Amount”. ASBA is an application containing an authorization 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only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed. ASBA is a process developed by the India's Stock Market Regulator SEBI for applying to IPO. In ASBA, an IPO applicant's account doesn't get debited until shares are allotted to them.
Earlier Qualified Institutional Buyers (QIBs) were not allowed to participate in IPOs through ASBA facility. Currently as per SEBI guidelines, Non-retail investors i.e. Qualified Institutional Buyers and Non-Institutional Investors, making application in public/rights issue shall mandatorily make use of ASBA facility. 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.
ASBA is Bombay Stock Exchange's (BSE) initiative to provide constantly innovative and investor friendly services to obviate the need for refunds. The ASBA process which has been successfully tested with eleven Self certified Syndicated banks ensures that the investor’s funds leave the bank account only upon allocation of shares in public issues. In other words, amount equivalent to shares applied for by the investors is retained only till the IPO process and would be debited from the account only on allotment of shares. Using this interface the banks, participating in the IPO process are able to upload the bids with respect to their customers, into the electronic book of BSE. The interface facilitates not only the controlling branch but also the designated branches of the banks to directly upload the bids into the electronic book at BSE.
In its continuing endeavor to make the existing public issue process more efficient, SEBI has decided to introduce a supplementary process of ...
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