What is ASBA and its benefits

What is ASBA and its Benefits?

The revolutionary Applications Supported by Blocked Amount (ASBA) system has been a game-changer in the fast-paced world of Indian financial markets. Not only an acronym, ASBA signifies a significant change in the way investors engage in rights issues and initial public offerings (IPOs). Investors may apply for shares using this innovative approach without worrying about their money leaving their bank accounts while the allotment procedure is underway.

ASBA changes the nature of capital market involvement by giving investors more power, transparency, and flexibility. In response to a commonly asked question, “What is ASBA account?” it is only the account where your funds are restricted from being used to cover possible share allocation. In essence, this is your bank account; however, the sum for the requested shares is blocked, making it available for use once your share allotment is approved.

Let us look deeper into ASBA and its benefits.

What is ASBA?

Applications Supported by Blocked Amount is the ASBA full form. The process known as ASBA for companies applying for IPOs (Initial Public Offerings), rights issues, FPS, etc., has been specified by the Securities and Exchange Board of India (SEBI), the regulator for the Indian stock market. Banking applications use the ASBA procedure, which prevents the investor’s money from being debited until the shares are assigned.

Investors must first grasp what is ASBA to comprehend how it operates. Securities regulators developed the ASBA mechanism to streamline the application and payment procedures for rights issues and other public offerings, including initial public offers (IPOs). Investors applying for securities through ASBA are not required to pay for them upfront. Instead, until the allotment process is finished, the necessary money is blocked in their bank accounts. ASBA ensures investor money is safeguarded and released only once securities are assigned. It eliminates the requirement for reimbursements and lowers the possibility that money would be misused while the application is being processed. With ASBA, investors can take part in public offers quickly and easily without dealing with the difficulties of processing refunds, writing checks, or worrying about oversubscription.

The entire application fee was immediately deducted from the bank account of investors before 2016 if they wished to apply for an IPO and other fundraising initiatives. The investors were prevented from receiving interest on their investment, and a more involved procedure was established for SEBI and other intermediaries to monitor the funds and return them to investors if they were not required to apply. As opposed to this, ASBA meaning explains that it blocks the bid amount inside the bank account so that investors can continue to get interest on their investment. Bank account debiting of the blocked money occurs only if an investor receives the application.

You are not required to ban any funds that could be used to purchase shares when you open a Demat account. Stock market transactions are easy to do, and when you buy stock, it is electronically kept in a Demat account. Every IPO subscription follows a distinct procedure. Your money is only deducted from your associated bank account if and when you receive your assigned shares quota when you file for an IPO through ASBA, depending on how many shares you wish to be granted. You require a Demat account to apply for an IPO via the ASBA procedure.

Benefits of ASBA

The following are the various benefits of ASBA:

  • Applications Supported by Blocked Amount (ASBA) streamlines the IPO subscription process, which was previously done via checks, a laborious and constrained procedure.
  • An investor can use the application to block funds and check payments instead of doing it themselves. Investors will benefit from earning interest on the blocked amount as well.
  • The investor is not required to have a depository account with their SCSB.
  • In the unlikely event that shares are not allotted, investors need not worry about a return. The application efficiently completes it on the backend.
  • Up to the allotment date, the investor may examine, amend, withdraw, and track the status of this bid.
  • Because of SCSB, the investor’s bank will continuously operate as his middleman for the subscription; in case of a discrepancy, he would know who to contact and how to do so.

Eligibility criteria for using ASBA

The following are the various eligibility criteria for using ASBA:

  • Investors must be based in India to qualify as residents.
  • A Demat account and a valid PAN card are required for the investor.
  • Investors must apply through a Self-certified Syndicate Bank (SCSB) that satisfies the requirements set forth by SEBI.
  • The investor’s bank account should be fully funded to cover the bid amount.
  • The investor only needs to select the number of shares they wish to bid for when bidding at the cut-off price.
  • Under no circumstances should the investor place a bid under a reserved category.
  • The requirement that an investor not alter an offer once it has been filed must be accepted.
  • It is an application that manages the account’s money, blocking and unblocking.
  • Using ASBA, less manual involvement is needed to give the investor who was not given shares at the IPO their unused money back.
  • Through ASBA, the issuer company ensures that the funds blocked for the IPO are correctly applied for unapproved reasons.
  • The investor may amend, withdraw, or cancel his share bid until the allotted date. The updated bid affects the blocked amount.
  • In contrast to the previous method, where the investor had to produce brand-new offer papers and destroy the old ones, revision of the bid is made simple in ASBA.
  • The investor has online access to the bid’s status.


With ASBA, investors may now engage in IPOs more effectively and conveniently, revolutionising the IPO application process in India. ASBA provides simple refund procedures, does away with the necessity for physical documents, and guarantees that investors receive interest on their blocked assets. It is now a well-liked option for investors wishing to make IPO investments. There has never been a more straightforward IPO application procedure thanks to ASBA, and this technology will continue to revolutionise the Indian stock market.

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