ASBA: Application Supported by Blocked Amount

Launched in 2008, ASBA (Application Supported by Blocked Amount) is a mechanism employed by all categories of investors—retail investors, non-institutional investors (NII), and qualified institutional buyers (QIB)—to make an application for shares in an IPO.

What is ASBA for IPOs?

ASBA enables investors to subscribe for shares in an IPO by authorizing Self-Certified Syndicate Banks (SCSBs) to block the amount of funds in their bank accounts. The funds are blocked throughout the subscription period. If allotment is made to the investor, the funds are taken out of the account. In case there is no allotment, the funds are returned into the investor's account after the last allotment date.

ASBA is the easiest, fastest, and most convenient way to apply for an IPO. One of the advantages for the investor is that interest keeps accruing on the blocked amount throughout the process.

• Investors can either apply for an IPO online or offline using ASBA.The application amount is not deducted from the bank account instantaneously; it is blocked.
• Interest keeps building up on the blocked amount until debited, in the event of an allotment.
• In the event of non-allotment or partial allotment, the amount is unblocked after the allotment is completed.
• Unlike UPI, ASBA doesn't need mandate approval.

ASBA has streamlined and accelerated the IPO application process by blocking the funds needed as and when investors confirm payment. This does away with cheques or demand drafts.

Investors can apply for an IPO via ASBA through an online or offline mode. The online process is normally quick and simpler than the offline route.

1. ASBA IPO Online Application

To make an online application for an IPO through ASBA, an investor can use the net banking facility of a bank that offers such a facility.

Procedure to Apply for an ASBA IPO Online:

1. Login to your net banking account which has ASBA facilities.
2. Go to the Investments option and find the IPO menu.
3. Select the IPO whose application you want to make.
4. Enter the mandatory details, such as your name, PAN number, and Demat account details.
5. Enter your bid information, including the quantity and price.
6. Submit the IPO application.

2. ASBA IPO Application Offline

Offline IPO application can be made by filling out a filled-in Physical IPO Application Form or ASBA form at the closest Self-Certified Syndicate Bank (SCSB) branch.

Offline IPO application is more labor-intensive, time-consuming, and lengthy in comparison to the online process.

Steps to Apply for an ASBA IPO Offline:

• Get the IPO application form from your broker or download the same from the NSE or BSE websites.
• Fill in your personal information, like Name, Address, Contact Number, Demat Account, and PAN.
• Enter bid information, like quantity, price, and choose the investor category and status.
• Enter payment information by entering your ASBA bank account number or UPI ID.
• Sign the form.
• Submit the form to your local SCSB branch.
• Retain the counterfoil (acknowledgment) received from the bank as proof of your IPO application.

ASBA IPO Application Form

• The ASBA form is available for download from the NSE/BSE websites or from a broker/lead manager.
• At first, ASBA forms were available in paper form, but from July 2010 onwards, ASBA forms have been made available online.

ASBA IPO Form Download links:

• ASBA IPO Form BSE
• ASBA IPO Form NSE

ASBA Charges

There is no fee for applying through the ASBA facility.

ASBA IPO Timing

• Application Time: 10 AM on the date of issue opening.
• Cut-off Time: 5 PM on the closing date of the issue (be aware that some banks may accept submission only up to 2–3 PM on the last date).

ASBA IPO Limits

• Up to 3 bids can be submitted by an investor for an IPO.
• Only a single application can be made from one bank account.
• QIBs and NIIs cannot withdraw their bids after they have been submitted.
• QIBs and NIIs cannot place bids at the cut-off price.

ASBA Rules for IPO Applications

• Investors need to have an account with an ASBA-enabled bank.
• For online ASBA applications, net banking facility for the ASBA account is needed.
• A PAN number and Demat account are required for IPO applications.

Third-Party ASBA IPO Application

Earlier, third-party IPO applications were permitted by some banks, where an investor could apply for up to 5 applications from a single bank account. However, since May 1, 2022, this facility is not available in India.

Both ASBA and UPI are available options for IPO applications, either online or offline.

Launched in 2008, ASBA was made compulsory for IPO applications in 2016. In 2019, SEBI launched UPI as a payment system for IPOs to move offline systems online.

Both ASBA and UPI use similar mechanisms, wherein the bank account of the investor is blocked for the application value after UPI approval. Thus, UPI is also commonly known as the "UPI ASBA" process.

ASBA VS UPI