ASBA (Applications Supported by Blocked Amount) 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.
ASBA process facilitates retail individual investors bidding at a
cut-off, with a 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 means “Applications 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the basis of allotment is finalized, or the issue is withdrawn/failed.
It is a supplementary process of applying in Initial Public Offers (IPO) 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 stipulated by SEBI, and available from most of the banks
operating in India. This allows the investors money to remain with the
bank till the shares are allotted after the IPO. Only then does the
money transfer out of the investors account to the company. This
eliminates the need for refunds on shares not being allotted.
As on 3 December 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 include the likes of Axis Bank, HDFC Bank, ICICI Bank, State Bank of India, Punjab National Bank, UCO Bank, IDBI Bank among others
Source :
http://en.wikipedia.org
