What is ASBA?

When applying for an IPO, one common worry for investors is, “What happens to my money if I don’t get the shares?” SEBI introduced ASBA (Applications Supported by Blocked Amount) as a solution to this problem. It refers to a facility that keeps your money safe in your bank account until the IPO allotment is finalised. This way, your funds remain secure and continue to earn interest that your bank provides while you wait.

This blog will break down the meaning of ASBA, explain the ASBA process, highlight its benefits and its work. Guide you on how to apply for an IPO using ASBA.

ASBA Meaning

The ASBA full form is Applications Supported by Blocked Amount. It refers to the facility introduced by the Securities and Exchange Board of India (SEBI) to make the IPO application process easier and more secure.

Under ASBA, when you apply for shares in an IPO, the required amount is not immediately debited from your bank account. Instead, the money is blocked in your account until the share allotment is finalised. If you receive shares, the amount is deducted; if not, the blocked funds are released automatically.

ASBA Process to Apply for an IPO

ASBA process for investors to apply for an IPO in two ways: offline using a physical form or online via net banking.

1. Offline Mode to Apply For an IPO Using ASBA:

• Collect the ASBA application form (NSE ASBA e-form or BSE ASBA form) from your bank branch or download it from the exchange’s website.
• Fill in details like your PAN, Demat account number, bank account number, and IPO bid information.
• Submit the form at your Self-Certified Syndicate Bank (SCSB) branch.
• Your bank will block the bid amount in your account and then submit your application details to the exchange.

2. Online Mode to Apply For an IPO Using ASBA:

• Log in to your bank’s net banking portal that supports ASBA.
• Go to the IPO/ASBA application section.
• Select the IPO you want to invest in, enter bid details, PAN, and Demat account information.
• Confirm your application, after which the funds will b

How Does the ASBA Process Work?

Here’s how the ASBA works:

1. Choose a Self-Certified Syndicate Bank (SCSB): Applications are accepted only through SEBI-approved banks known as Self-Certified Syndicate Banks. These banks manage the blocking of funds and forward your application details to the stock exchanges.
2. Complete the ASBA Application: You can apply online via net banking or submit a physical ASBA application form at your bank branch.
3. Funds Blocking: The bank marks the required amount in your account as “blocked.” The money stays in your account, continues to earn interest, but cannot be withdrawn until the IPO allotment process is completed.

Benefits of ASBA

ASBA has changed the way investors apply for IPOs by making the process more secure and hassle-free. Here are some of the main advantages:

• Funds Stay in Your Account: Unlike the old system, your money isn’t transferred right away. It stays in your bank account and is only debited if you get the allotment.
• Earn Interest on Blocked Amount: The blocked amount continues to earn savings account interest until it is debited.
• No Refund Delays: Since money is never transferred upfront, there’s no waiting for refunds if shares are not allotted.
• Convenience of Online & Offline Options: Investors can apply through both physical forms or through their bank’s net banking portal.
• Greater Transparency & Security: The process is fully regulated by SEBI, giving investors confidence that their funds are safe and properly handled.
• Simplified Application Process: By eliminating cheques and demand drafts, ASBA reduces paperwork and errors, making the IPO application smoother.

Eligibility Criteria for Using ASBA

Not all investors can apply through ASBA. SEBI has defined certain conditions that must be met:

1. Bank Account with an SCSB: You must hold a savings or current account with a bank that is registered as a Self-Certified Syndicate Bank (SCSB).
2. Demat Account: A valid Demat account is mandatory, since IPO shares are credited in electronic form only.
3. PAN Requirement: You should have a valid Permanent Account Number (PAN) issued by the Income Tax Department.
4. Sufficient Funds: Your account must have enough balance to cover the application amount for the IPO.
5. Indian Resident Investors: Retail investors, Qualified Institutional Buyers (QIBs), and Non-Institutional Investors (NIIs) residing in India can apply through ASBA.

Important Points to Remember

When applying for an IPO using ASBA, keep the following in mind:

• Ensure your PAN, Demat account number, and bank details are accurate. A mismatch in details could result in the rejection of your application.
• Multiple ASBA applications with the same PAN may be rejected.
• Make sure your bank account has sufficient funds to cover the IPO application amount.
• Using the ASBA facility is compulsory for IPO applications exceeding ₹2 lakh.
• Before applying, confirm that your bank is a registered Self-Certified Syndicate Bank (SCSB).
• You can monitor your IPO application and allotment status through your bank or the exchange website.

Can You Cancel An ASBA Application?

Yes, you can cancel or modify an IPO application made through ASBA, but the rules depend on the timing:

1. Before the IPO closing date: You can freely cancel or edit your application through your bank’s net banking portal (online) or by visiting your SCSB branch (offline). Once cancelled, the bank immediately releases the blocked funds.
   
2. After the IPO closes but before allotment: You cannot cancel your application after the IPO closes, but if you don't receive an allotment, the blocked amount will be automatically released back into your account.
   
3. Partial Allotment: If you receive fewer shares than you requested, only the amount for those shares will be debited, and the remaining funds will be unblocked.

Conclusion

In India, ASBA has changed how both retail and institutional investors apply for IPOs. By blocking funds instead of transferring them upfront, it provides greater safety, transparency, and efficiency. Whether you use the ASBA IPO form offline or apply online through your bank, the process ensures peace of mind while participating in IPOs.

If you want to start investing in IPOs, open your demat account today!

FAQs

1. What is ASBA in IPO?

ASBA is an application method where IPO funds are blocked in your bank account until shares are allotted.

2. What is ASBA's full form?

ASBA stands for Applications Supported by Blocked Amount.

3. Can I apply for an IPO without ASBA?

No, ASBA is mandatory for IPO applications in India.

4. Which banks provide ASBA services?

Only SEBI-designated Self-Certified Syndicate Banks (SCSBs) can offer ASBA.

5. Is ASBA applicable to rights issues?

Yes, ASBA can be used for IPOs as well as for rights issues and FPOs (Follow-on Public Offerings).