What is ASBA? Full Form, Benefits and Detailed Application Process

What is ASBA? Full Form, Benefits and Detailed Application Process

ASBA is one of the primary reasons why IPO has gained popularity among retail investors. Through ASBA, your investment amount gets and stays locked in your bank account until you get an allotment. SEBI has made it mandatory to fill up an ASBA form if you wish to invest in IPO since 2016. 

In this article, you will get to know what is ASBA and how you can invest in IPO via ASBA.

What Is ASBA? 

The ASBA full form is Application Supported by Blocked Amount. It is a highly convenient IPO application process. This application holds authorisation to block a certain amount in the bank amount of the applicant for subscription to an IPO issue. This blocked amount can only be utilised for IPO application purposes.

If you apply through ASBA, your money gets debited only if your application qualifies for the preferred allotment. Otherwise, the amount is unlocked and refunded to your bank account. However, the blocked amount continues to earn interest. If you are a non-retail investor, it is mandatory for you to apply through ASBA. 

What Are the Benefits of ASBA? 

SEBI has mandated applying through ASBA for non-retail investors since 2016. However, many retail investors use this application process as well due to numerous benefits it holds. Here are the benefits of ASBA: 

  • ASBA is an application process which is smooth and free of cost. You can conveniently apply via net banking and it takes less than 5 minutes to complete the application process. 
  • When you apply through ASBA, your money gets blocked and not debited. Hence, the amount keeps earning income until the whole process is completed.  
  • The process is totally safe and transparent. You personally authorise blocking of the amount. The bank and SEBI oversee this process, so there is almost no chance of bank frauds. Also, if you do not get an allotment of the preferred share, you will receive refund of the blocked fund. 
  • ASBA is a completely digital process. It doesn’t require you to submit any physical documentation. 
  • The blocked amount is determined by taking into consideration the Average Quarterly Balance in the account. 

What Are the Eligibility Criteria of ASBA?

You have to satisfy the following eligibility criteria to be fit for ASBA application process: 

  • One should be an Indian residential investor. 
  • The investor should have a PAN Card 
  • You should have valid Demat and trading accounts. 
  • You should have a sufficient balance in your bank account. 
  • One needs to apply by blocking of fund through a bank account with a Self-Certified Syndicate Bank.
  • You should not bid under any of the reserved categories. 
  • You need to agree to the terms and conditions of not altering a bid.
  • You have to bid at cut off, which means a single option of number of shares to bid for.

What Is the Application Process of ASBA?

You can apply through ASBA by availing either online or offline process. 

Online Application Process

Step 1: Log in to your Net banking account and click on ‘IPO Application’. 

Step 2: Select the specific IPO you wish to invest in and choose up to 3 bids. 

Step 3: Fill in the application form with the necessary details in the redirected IPO platform. 

Step 4: Fill in details such as PAN number, bid price, bid quantity, and 16 digit DP number.

Step 5: Place and confirm your order. 

After you submit your application successfully, you can check the status on NSE and BSE websites. 

Offline Application Process 

Step 1: Download the application form available from NSE and BSE websites. 

Step 2: Fill out the details such as name, PAN details, bid price, bid quantity, Demat account number, bank account number and Indian Financial System Code (IFSC). 

Step 3: Submit the duly filled application form at the Self-certified Syndicate Bank. 

Step 4: Collect the receipt. 

The bank will block the amount and upload the details on the bidding platform. 

Can You Apply for ASBA through UPI? 

You can apply through UPI if you are a small investor with a bid up to ₹2 lakh. Following are the steps to apply for an IPO: 

Step 1: Log in to the client’s portal of your broker’s website. 

Step 2: Click on the IPO application button. 

Step 3: Choose the IPO you want to bid for. 

Step 4: Choose your preferred bid size and cut off price in the bidding window. 

Step 5: Enter your UPI details. 

Step 6: Accept the payment request in your UPI app to complete the payment. 

Step 7: You will receive an email and SMS stating your application submission was successful. 

Can You Withdraw an ASBA Application? 

Yes, you can cancel or withdraw your ASBA application. This option is only available till the time the issue is open for bidding. For example, if an IPO bidding window stays open for 5 days, you can withdraw your application anytime within these 5 days. After you withdraw the application, the bank unlocks the blocked fund the next day. 

How to Avoid Rejection of IPO Application? 

Here are the following tips you can use to ensure successful submission of your application: 

  • You can only use one PAN ID for single IPO. Your application will not be accepted if you try to apply for the same IPO with the same PAN twice. 
  • As an investor, you can only apply for a maximum of 3 bids. 
  • You should have sufficient funds in your bank account. 
  • You should fill the application form with correct information. 
  • The application might face rejection if the information in your Demat account does not match the PAN details. 

Final Word 

ASBA IPO application process is simpler and safer than any other IPO application process. Now that you know what is ASBA and its application process, you can conveniently apply for an IPO of your choice.