SEBI has made it compulsory for retail investors to apply for IPO using ASBA (Applications Supported by Blocked Amount) only. ASBA was launched on May 1, 2010 and is a facility wherein the amount remains blocked in the savings bank account of the applicant until the shares in IPO is allocated to him. In case the shares are not allocated, the amount is unblocked immediately and open for use.
The advantage of ASBA is there is no delay in refund of application amount in case no shares or fewer shares are allocated to investor in IPO. Also the amount is only debited (to that extent) from the account when a confirmed allotment happens.
For example, in case of the present IPO Precision Camshaft, you want to apply for 800 shares at cutoff price (Rs 186). When you do so the bank will block Rs 1,48,800 (Rs 800 X 186) in your savings account. You can see the money in your account but cannot use it. Once the allotment happens, the money would be debited from your account. In case there was over-subscription and you were allotted only 80 shares at cut-off price, only Rs 14,880 would be debited. Rest amount would be unlocked and free for use. In case there is no allotment, all amount would be free.
As you can see the advantage of ASBA are instant refund and also the money lying in savings account keep on earning interest.
The problem is ASBA is still not popular among retail investors. In last three IPOs more than 75% of applications can from non-ASBA route. Making it compulsory might leave some investors. Also not all banks offer online ASBA facility which is another major issue.
Banks like Axis, SBI, IDBI Bank, Bank of Baroda etc offer online facility to apply for IPO through ASBA. All you need to do is login to your internet banking and search for ASBA.
Below is the screenshot for SBI ASBA facility.
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The form is simple you just need to give your PAN number, Demat account number and IPO bidding details.
After this you would be promoted for high security password sent on your registered mobile. Once you enter that correctly you get the acknowledgement page with the details.
In case your bank does not offer online ASBA facility, you need to fill up an online form, take a print out and deposit in relevant branch of your bank. Following are the steps:
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Step 1: Go to ASBA e-Forms on NSE
Step 2: Select the IPO you want to apply
Step 3: Click on Bid-cum Application Form Download
Step 4: Fill up the online form
Step 5: Download the form
Step 6: Submit the form to designated branch along with PAN card photocopy
With ASBA being compulsory, retail investors would be forced to use it. Ideally with so many advantages, SEBI should have tried to make it popular rather than compulsory.
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View Comments
Hi Amit, how to sell iPo shares which are applied through online sbi?
The shares are credited in your demat account even if you used SBI for ASBA. So sell it from your demat account.
ASBA - A good channel to make investments in IPO. great article.
ASBA- If at the time of procedure of from i have insufficient balance in my account then what haapand ? form reject ?
You would not be able to do ASBA if there is not sufficient balance in your account. Once ASBA is done the relevant amount is locked and cannot be withdrawn until you cancel ASBA or do not get any allotment.
Hi Amit,
I haven't tried to cancel application on last day after 2:30 PM.
I need to know in case a "IPO on last is not heavily oversubscribe" and I have to cancel the bid/application in SBI Saving Account ASBA screen.
Can I cancel a IPO application in SBI SAVING ACCOUNT ASBA facility after 2:30 PM on IPO closure day ?
Thanks
SAC
You can cancel the IPO application applied through ASBA. As per me cancelling should be allowed before 2:30. But suggest you to confirm the same with SBI customer care as the cutoff timing for ASBA application/withdrawal would be different for different banks.
at nse website filling detail as new user,error comming as invalid key.where all account detail is two times checked ok
My mother has demat account in zerodha . So during IPO can I fill ASBA details from my bank account and put her Demat account number for reciving the shares.
Yes you can
I have used it extensively. ASBA is a good channel to bid for an IPO.
What are the charges for ASBA ??
I have a savings account in SBI and want to know the same
Its free
ASBA is really useful specially with online bank account as you don't need to transfer funds to any of the stovk brokers. This artivle is really useful.
My demat account can't be mapped why??
I am not sure, talk to Demat/bank customer care team.