Why Every Investor is Using ASBA for IPOs – And You Should Too!

Many of us hesitate to apply for IPOs because we often fear losing the liquidity of our money while waiting for allotments. To enhance efficiency in this process, SEBI introduced ASBA. Instead of deducting money upfront, the ASBA account blocks the required amount in your bank account. This way, your money remains in your account, earning interest, and is only debited if shares are allotted to you.

This simple yet powerful system makes IPO investing safer and more efficient for traders and investors in India.

Here’s everything you need to know about how ASBA in IPO works and how you can apply for your next IPO without worrying about your money!

What is ASBA?

ASBA full form is Application Supported by Blocked Amount. It allows investors to apply for Initial Public Offerings (IPOs) and Follow-on Public Offerings (FPOs) by blocking the required amount in their bank accounts instead of transferring it upfront. The amount remains in the account and continues to earn interest until the allotment process is completed. With this, only the final allotted amount is debited, and any excess amount is unblocked.

SEBI has made ASBA mandatory for all retail investors applying for public issues.

What is ASBA Account?

An ASBA account is a regular bank account that allows investors to apply for IPOs without transferring money in advance. Banks designated as Self Certified Syndicate Banks (SCSBs) provide ASBA services. This account ensures that funds remain blocked for IPO applications without affecting your liquidity.

How Does ASBA Work?

Here is a simple process with which ASBA allows investors to apply for IPOs or rights issues:

1. The investor applies for shares through ASBA.
2. The bank blocks the application amount in their account.
3. If shares are allotted, only the required amount is debited, and the rest is released.
4. If no shares are allotted, the entire blocked amount is freed up, eliminating the need for refunds.

This process makes IPO investing simpler, faster, and more efficient compared to traditional methods.

Key Features of ASBA (Application Supported by Blocked Amount)

ASBA promotes efficiency and safety in IPO applications.

• Investors can apply for an IPO online or offline using ASBA.
• The application amount isn’t deducted immediately. Instead, your bank blocks the required funds.
• You get to earn interest on the blocked amount until it is debited if shares are allotted.
• If the investor doesn’t get full allotment, the remaining balance is released after allotment.

Application Methods for ASBA

You can apply for IPOs using ASBA through multiple channels:

• Bank Branches: Physical submission at an SCSB branch.
• Internet Banking: Many banks offer online ASBA applications.
• Mobile Applications: Some banks like PNB (PNB One) and financial platforms provide mobile-based ASBA services.
• BSE/NSE Websites: IPO applications can be made through stock exchange portals.

IPO Applications Through ASBA

ASBA is widely used in IPO applications, allowing retail and institutional investors to bid for shares efficiently.

Applying for an IPO Through ASBA- Online

You can apply for an IPO online using ASBA through your bank’s net banking services.

Steps to Apply for an IPO via ASBA Online:

1. Log in to your net banking account that offers ASBA services.
2. Go to the Investments section and search for the IPO option.
3. Select the IPO you want to apply for.
4. Next, you need to enter details like the applicant’s name, PAN number, and Demat account details.
5. Fill in the bid quantity and price as per your preference.
6. Submit the IPO application.

Here are some additional things you need to know about Applications Supported by Blocked Amounts:

• When applying for the first time, you must enter details like name, PAN, and DP (Depository Participant) details. After that, only bid details are needed for future applications.
• Some banks may ask for an OTP to verify and complete the process.

Applying for an IPO Through ASBA – Offline

With ASBA, investors can also apply through their bank account.

1. Investors must fill out the physical ASBA form, which is available at designated bank branches (SCSBs). The form requires details like name, PAN number, demat account number, bid quantity, bid price, and other relevant information.
2. The completed form must be submitted to the bank branch along with an instruction to block the required amount in the account.
3. The bank then uploads the application details onto the bidding platform.
4. Investors must ensure all details are correctly filled in, as any mistakes may lead to rejection.
   

Note- Some banks (SCSBs) also allow investors to apply online if they offer electronic ASBA facilities.

Eligibility for ASBA

To use ASBA, an investor must:

• Be an Indian resident with a demat account.
• Have a bank account with an SCSB.
• Apply for an IPO through retail, non-institutional, or QIB (Qualified Institutional Buyer) categories.

ASBA IPO Application Form

Investors can apply for an IPO offline by using the ASBA application form, which can be downloaded from the NSE/BSE website.

Download Links:

• ASBA IPO Form – BSE
• ASBA IPO Form – NSE

Benefits of ASBA: Why Every Investor Should Use It for IPOs

Why is ASBA a Smart Choice for IPO Applications?

Let us see!

1. ASBA simplifies and secures IPO and rights issue applications by blocking funds instead of debiting them immediately.
2. Money is blocked, not debited immediately, ensuring better liquidity.
3. Your funds stay in your account and continue earning interest until allotment.
4. The required amount is blocked for a shorter period, which improves flexibility.
5. You can lock in the offer price early and increase your chances of allotment.
6. If no allotment is made, funds are automatically unblocked.
7. ASBA process reduces the risk of fund misuse or refund delays.

Enjoy zero brokerage on IPOs and a free Demat account. Start now! 

How is UPI-Based IPO Application Different from ASBA via Intermediaries?

UPI simplifies the IPO application process by making it completely online. Unlike traditional ASBA through banks and intermediaries, UPI allows investors to:

• Create a UPI ID and PIN using any UPI-enabled mobile app.
• Use the UPI ID to block funds for the IPO application.
• Accept the fund-blocking request by entering the UPI PIN in the mobile app.
• If allotted, funds are automatically transferred to the IPO Escrow Bank.

UPI ASBA Route

SEBI has introduced UPI-based ASBA for retail investors. 

The UPI ASBA (Applications Supported by Blocked Amount) route is a streamlined process for retail investors to apply for Initial Public Offerings (IPOs) using their UPI ID. This method allows investors to block the application amount in their bank account via UPI without the funds being debited until the shares are allotted.

Applications between ₹2 lakhs and ₹5 lakhs are categorised as High Net-worth Individual (HNI) applications. Individual investors with application amounts up to ₹5 lakhs can apply through the UPI ASBA route. 

However, ASBA should be used for any amount beyond that!

Conclusion

ASBA is a secure, efficient, and SEBI-approved method for applying to IPOs. It benefits investors with flexibility, interest earnings, and easy refunds. With multiple banks offering ASBA services and the introduction of UPI ASBA, IPO applications have a convenient investment choice!

ASBA Meaning: FAQs on ASBA for Investors

Source: Sebi

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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.