What is ASBA: Features and How to Apply Investing in IPOs allows investors to enter the ground floor of a company with high growth potential. With IPOs, companies can raise funds from the market even during an economic slowdown when the banks are reluctant to lend money. It is your window to gain quick profit. It also helps you accumulate wealth in the long run to meet your long run financial goals. Investing in IPOs is usually a great decision if you are well-informed and fully aware of the market conditions. Both beginners and experienced investors are following upcoming IPOs for future investments. What is ASBA in IPO investment? If you are investing in IPOs, it is better to understand ASBA's meaning beforehand. ASBA is one reason that helped popularise IPOs among retail investors. ASBA is an application process for IPOs developed and implemented by SEBI. It stands for Application Supported by Blocked Amount. Before ASBA, the IPO application process was cumbersome. The investors needed to issue a cheque to the banker of the IPO at a fixed rate. In 2008, SEBI replaced the older system with ASBA. ASBA is an authorisation method. It allows the bank to block the amount on the applicant's account. Individuals can't use the blocked amount in their account but continue to earn interest income on it. The previous system paid no interest on the blocked capital. The money is only when the shares are allotted in your name. If you don't receive the full allotment or only partial shares, the bank will release the block amount. Since 2016, SEBI has made it mandatory for all retail investors to invest through ASBA. How to apply for ASBA Investors can select either online or offline methods of ASBA. ● ● ● ●
Login to the Netbanking account and click on 'IPO Application.' You can choose an IPO you want to apply for and mention up to 3 bids Fill in your Demat account details and Submit your application The amount will be blocked in your account till the allotment of the IPO shares.
ASBA is available to all Indian investors. You will need your PAN card, Demat and Trading account details, and adequate capital in your account to apply through ASBA.