What is Asba and how does ASBA work?

Under ASBA, funds blocked in the account, will continue to earn interest during the application processing period, if held in an interest-bearing account. Bank will mark a lien on the deposit account of the investor to the extent of the application money. The lien will be removed immediately after finalization of the basis of allotment.

What is the use of ASBA in IPO?

ASBA facility can be used for Initial Public Offer (IPO) and Follow-on Public Offer (FPO). 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only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn / failed.

Is it necessary to have a Demat account with SBI for ASBA?

It is not necessary to have a Demat account with SBI for applying through ASBA. Customer having Demat account with other entities can also apply through the SBI- ASBA facility. An investor can withdraw the application during the bidding period but cannot modify the application.

Is ASBA facility available on overdraft or loan accounts?

ASBA facility is not available on any type of overdraft or loan accounts. Has a Demat account with any of the Depository Participants (DPs) and also has a Permanent Account Number (PAN). Holds shares in dematerialized form and has applied for entitlements and /or additional shares in the issues in the dematerialized form.

What is ASBA in IPO application process?

Moreover, from January 2016 onward it is mandatory to apply for an initial public offering (IPO) through this method by Securities and Exchange Board of India, the SEBI. The SEBI is the regulator of an IPO in India. ASBA is an authorization to block the application money in a bank account. Thus, ASBA is a process of applying for an IPO.

What is ASBA under SEBI regulations?

As per definition in clause (d) of sub-Regulation (1) of Regulation 2 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009, ASBA is – “An application containing an authorization to block the application money in the Bank account for subscribing to an IPO/FPO or Rights Issue.”

When is ASBA application subject to rejection?

The ASBA application is subject to rejection when the below mentioned circumstances met – Name on the PAN card miss-matches with the Demat holder’s name. Multiple application by the same applicant through ASBA or no-ASBA method. What is the importance of ASBA for the retail investor?