{"id":15189,"date":"2019-04-03T15:00:16","date_gmt":"2019-04-03T09:30:16","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=15189"},"modified":"2019-09-16T18:00:44","modified_gmt":"2019-09-16T12:30:44","slug":"application-supported-by-blocked-amount","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/application-supported-by-blocked-amount\/","title":{"rendered":"Application Supported By Blocked Amount (ASBA)\ufeff"},"content":{"rendered":"<p>Application Supported by Blocked Amount is a facility that the banks provide to investors in cases of IPOs (initial public offerings), FPOs (follow-on public offers) and NFOs (New Fund Offers) of mutual funds. The <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;ASBA&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Applications Supported by Blocked Amount (ASBA) is a system introduced by the Securities and Exchange Board of India (SEBI) to enhance the efficiency and transparency of the application process(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/asba\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>ASBA<\/a> facility has been developed by the <strong>Securities and Exchange Board of India<\/strong><sup><a href=\"https:\/\/www.sebi.gov.in\/\">[1]<\/a><\/sup> (SEBI).<\/p>\n\n\n\n<p>In this article, we will detail you about the ASBA, Its mandatory laws, and compliances, <a rel=\"noopener noreferrer\" href=\"https:\/\/enterslice.com\/learning\/sebi-guidelines-for-making-public-offer\/\" target=\"_blank\"><strong>SEBI guidelines<\/strong><\/a>, Procedure to apply for ASBA and related matters.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is ASBA is all about?<\/strong><\/h2>\n\n\n\n<p>ASBA is a system for\nmaking an application to an IPO, as proposed by SEBI. It is investor-friendly\nand serves as a platform where banks have also become participants in the\nprocess of IPO. &nbsp;<\/p>\n\n\n\n<p>When an application via\nASBA is made for IPO\/FPO\/NPO, the application amount in the bank account of the\napplicant gets blocked. This application amount stays in the bank account but\ncannot be used by the till the time units of shares or mutual funds are\nallotted. The application amount from the bank will get debited provided the\napplication for <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Allotment&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;An allotment is the systematic distribution of business resources, often pertaining to the distribution of shares during initial public offerings (IPOs) to underwriting firms or to new and(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/allotment\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>allotment<\/a> is selected after finalization of the <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Basis&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;In finance, the &amp;quot;basis&amp;quot; is a term with several applications, including representing the difference between the spot price and the future contract price of an asset, which is vital in investment(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/basis\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>basis<\/a> for an allotment\nor if the issue is withdrawn or failed. &nbsp;<\/p>\n\n\n\n<p>The amount that gets\ndebited from the bank account will be dependent on the units of shares or\nmutual funds that get allotted. If after allotment, any amount remains in the\nbank amount, the same shall be released for use. <\/p>\n\n\n\n<p><strong><em>ASBA has been made mandatory for\nIPO&rsquo;s since January 1, 2016, by SEBI. However, this has not been made mandatory\nfor the retail investors and they can use the facility of making application\nwith a cheque as well. <\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Main\nFeatures of ASBA<\/strong><\/h2>\n\n\n\n<p>The key features of\nASBA are discussed henceforth:<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Alternative Mode of Payment<\/strong><\/h2>\n\n\n\n<p>ASBA serves as an\nalternative mode of payment in getting issues by providing the facility of\namount blocking in the bank account. Traditionally, the payment for buying\nunits in IPO\/NPO was done via demand drafts or cheques. Thus, ASBA has provided\nthe applicants with a more convenient and reliable mode of payment as the\napplication money gets blocked in bank account till the time units of\nshares\/mutual funds get allotted actually.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Investor Bidding<\/strong><\/h2>\n\n\n\n<p>ASBA provides\nfacilities of investor bidding with various options to the investors. The\ninvestors can also apply via SCSBs (Self Certified Syndicate Banks) if they\nhave an account in that. <\/p>\n\n\n\n<div class=\"shadow1\">SCSBs are banks that fulfill the conditions laid down by the Securities and Exchange Board of India (SEBI). These are certified by SEBI and aid the retail investors in making an application for an IPO through ASBA method. They block the application amount of IPO until the final allocations are made. This gives assurance to the Issuer Company that the application money is secure and is not used by the investors for other purposes. <\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>ASBA\nProcedure<\/strong><\/h2>\n\n\n\n<p>The ASBA procedure is\ndiscussed in detail as follows:<\/p>\n\n\n\n<ul><li>The retail investors can apply for any issue- public or rights through their bank account with the help of the ASBA facility.<\/li><li>The investors will have to fill out the ASBA form and fill out the necessary details such as applicant&rsquo;s name, PAN, demat account number, bid quantity and price, and all the other related details. Along with this, the investor will have to give the bank instruction pertaining to blocking the amount in his\/her account. <strong><em>(The ASBA form is usually available at the designated branches of the banks that have been approved for providing the ASBA facility).<\/em><\/strong> <\/li><li>After the ASBA form has been duly filled by the investor, the details of the investor are uploaded in the bidding platform by the bank.<\/li><li>If the details filled in by the investor in the ASBA form are not correct, the application will get declined. <\/li><li>If the application is accepted and the shares are allotted to the investor by the company, the application amount shall be deducted from the account of the investor by the bank. The amount in excess of the application money shall be refunded.<\/li><li>When making an ASBA application, it is necessary that the applicant holds an account with the bank that has been approved for providing this facility. However, holding a Demat account in the same bank is not mandatory for the applicant. The option can be availed even via net-banking or submission to the bank. <\/li><\/ul>\n\n\n\n<div class=\"read\"><p><b>Read More:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/sebi-guidelines-for-making-public-offer\/\" target=\"_blank\" rel=\"noopener noreferrer\">SEBI Guidelines for Making Public Offer<\/a><\/mark>.<\/p><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Who\nCan Apply via ASBA?<\/strong><\/h2>\n\n\n\n<p>The application can be\nmade via ASBA in a public issue by individual investors. This application can\nbe made through book building route provided the investor:<\/p>\n\n\n\n<ul><li>is bidding at\ncut off, with only a single option for a number of shares that are bid for;<\/li><li>is a resident\nindividual investor, i.e., the investor has applied for shares for not more\nthan INR 1 lakh;<\/li><li>has made the\nshare application via ASBA with the SCSC where he\/she has an account;<\/li><li>has made an\nagreement of not revising the bid;<\/li><li>has not made the\nbid in any of the reserved categories of shares. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>ASBA\nfor Rights Issue<\/strong><\/h2>\n\n\n\n<p>Using ASBA process for a\nrights issue of shares has been permitted by SEBI. The rights issue allotment\nof shares via ASBA would be done on a pilot basis. The shareholders can apply\nfor rights issue via ASBA subject to the following conditions:<\/p>\n\n\n\n<ul><li>the shares are held by the shareholders in dematerialized form;<\/li><li>the shareholders have made an application for additional shares or entitlement for issue in dematerialized form;<\/li><li>shareholders have not partly or wholly renounced the entitlements;<\/li><li>shareholders are not renounced to the shares being issues; <strong><em>(A renounce means a <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Shareholder&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;A shareholder is an individual or entity that owns at least one share of a company&amp;#039;s stock, granting them partial ownership of the company. This status allows them certain rights, including(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/shareholder\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>shareholder<\/a> who has declined the rights shares issued by the company or transferred the rights shares to another person for a consideration.)<\/em><\/strong><\/li><li>shareholders have made an application for allotment of shares via SCSBs, where they have an account.&nbsp; <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Advantages\nof ASBA<\/strong><\/h2>\n\n\n\n<ol><li><strong>No hassle of draft or cheque<\/strong><\/li><\/ol>\n\n\n\n<p>There is no requirement on part of the investor to pay the applicable amount via cheque or demand draft. The investor only has to submit ASBA, via which he\/she gives the approval to block the amount in the bank account equivalent to the application money of share allotment. <\/p>\n\n\n\n<ul><li><strong>No Stress of Refund<\/strong><\/li><\/ul>\n\n\n\n<p>There is no tension of\nrefund for the investor. Only the amount equivalent to the application money of\nshare allotment is blocked in the bank account. The amount gets debited only if\nthe application of the investor is selected for the share allotment. Otherwise,\nthe entire amount is automatically refunded to the investor. If the application\nis selected, the amount in excess of the application money is invested to the\ninvestor.<\/p>\n\n\n\n<ul><li><strong>No Loss of Interest of Investor<\/strong><\/li><\/ul>\n\n\n\n<p>There is no loss on the interest that the investor was supposed to earn on the money in a bank account. Even when the amount is blocked, the investor continues to earn interest on it.<\/p>\n\n\n\n<ul><li><strong>Simple and Time-Efficient<\/strong><\/li><\/ul>\n\n\n\n<p>The ASBA form is very\nsimple. It has reduced the stress of the retail investors to a large extent\nsince there is no hassle of drawing a demand draft or making a cheque in the\nfavor of issuing company. Moreover, if the application was rejected earlier,\ngetting a refund from the company was a tiresome process. Now, the blocked\namount is automatically refunded.<\/p>\n\n\n\n<ul><li><strong>5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;\n<\/strong><strong>Bank Acts as Intermediary<\/strong><\/li><\/ul>\n\n\n\n<p>The bank act as an intermediary between the investor and the company. As a result of this, the bank has taken away a lot of stress and responsibility of the investors as well as the company on itself. With a bank as an intermediary, the whole process of <a href=\"https:\/\/enterslice.com\/ipo-support\"><strong>IPO<\/strong><\/a> has become quicker, transparent and efficient. It has secured both the company as well as the investor in the sense that the companies are ensured that the application money stays blocked till the time it makes final allotment of shares\/securities and the investor has been saved from the hassle of filling out the application forms, drawing cheques\/drafts and taking refund in case the application is declined. Hence, a lot of time is saved, both for the issuing company and the investor. <\/p>\n\n\n\n<p>For more information on ASBA or making an application via ASBA, contact us at <a href=\"https:\/\/enterslice.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Enterslice<\/a>.<\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/sebi-depository-participant-regulations\/\" target=\"_blank\" rel=\"noopener noreferrer\">SEBI (Depository Participant Regulations), 1996<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Application Supported by Blocked Amount is a facility that the banks provide to investors in cases of IPOs (initial public offerings), FPOs (follow-on public offers) and NFOs (New Fund Offers) of mutual funds. The ASBA facility has been developed by the Securities and Exchange Board of India[1] (SEBI). In this article, we will detail you [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":15190,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[2510],"acf":{"service_id":"215"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Application Supported by Blocked Amount (ASBA)\ufeff: Enterslice<\/title>\n<meta name=\"description\" content=\"Application Supported by Blocked Amount is a facility that the banks provide to investors in cases of IPOs (initial public offerings).\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/application-supported-by-blocked-amount\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Application Supported by Blocked Amount (ASBA)\ufeff: Enterslice\" \/>\n<meta property=\"og:description\" content=\"Application Supported by Blocked Amount is a facility that the banks provide to investors in cases of IPOs (initial public offerings).\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/application-supported-by-blocked-amount\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:author\" content=\"enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2019-04-03T09:30:16+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-09-16T12:30:44+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/04\/Application-Supported-by-Blocked-Amount.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"700\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Narendra Kumar","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/04\/nk-1.jpg","authorDescription":"Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.","postViews":556,"readingTime":5,"nextPost":{"id":15195,"slug":"no-agreement-on-why-consumer-goods-demand-rose-after-gst"},"prevPost":{"id":15173,"slug":"can-voice-recording-be-used-as-evidence-in-courts-in-india"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/04\/Application-Supported-by-Blocked-Amount.jpg","postTerms":"Latest News","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/15189"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=15189"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/15189\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/15190"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=15189"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=15189"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=15189"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}