Is ASBA Mandatory for IPO?

IPOs have gained a separate fandom in India and why not? Over the years IPO investment have generated great returns. Opening an IPO investment account is also very convenient which further increases the interest of the investors. But while applying a lot of people often wonder, is ASBA mandatory for IPO?

Let us try to figure out the answer to this question in this article. So, let’s begin!

Is ASBA Compulsory?

The answer to this question is, yes. All the retail traders applying for IPOs have to definitely go through the ASBA process.

But what is ASBA? It means Application Supported by Blocked Amount. In this, when an investor applied for an IPO, the amount is not debited from his account till the allotment of shares. Rather, the amount is just blocked in the account and is not available for use. If an investor gets the allotment of the IPO, the amount is debited from the account.

If the shares are not allotted to you, the amount will get credited to your account. Thus, there is no loss in applying for the IPO.

Securities and Exchange Board of India made it compulsory for all individuals to apply through ASBA on January 1, 2016. Post this, every IPO has to be applied through ASBA.

This step was taken with regard to the increasing number of IPO applications. Depository participants were also granted permission to accept the applications online and offline to ensure a smooth application process.

Benefits of ASBA

The process of ASBA is now compulsory and also a convenient one. There are various benefits of applying through ASBA. Let us have a glance quickly.

• The money is just blocked in your account and is not debited till the time of allotment. This ensures that you don’t worry about losing your money.
• Although you cannot use the blocked amount, you still get the interest on the blocked amount.
• It is time-saving and convenient.
• You don’t have to wait or worry about the refunds because in case the IPO shares are not allotted to you, the money will be unblocked and credited in your account.

Now, that we know that it is compulsory and beneficial to use ASBA for IPO application, let us have a look at how to do that.

How to Apply for IPO Through ASBA

You can apply for an IPO through IPO either offline or online, according to your own convenience. But remember that ASBA is mandatory for IPO.

If you are applying for IPO online then you need to follow the given steps.

• Start by logging in to your net banking portal. For a smoother experience, you can use the Jiffy app by Choice.
• Go to the option of IPO application. You will see a complete list of all the open IPOs.
• Select the IPO that you want to apply for.
• Now enter all the required details like quantity, price, and your UPI ID in the application window.
• Click on ‘Apply Now‘ You will then receive a mandate to block the desired amount in your account.
• On successful verification, your money will be blocked in your account.
  
  

ASBA e Form

You can also apply for an IPO through the offline process. The process for the same is given in the steps below.

• You can register as a new user on the NSE website to begin the process.
• Enter the basic details and your PAN card number. You will get your user ID and password.
• Download the ASBA form, fill in all the details and submit it to the nearest branch of your stockbroker or the Self-certified Syndicate Banks. You will also have to submit the required identity proofs.
• Submit a cheque of the desired amount.

Here also, after the successful verification, the desired amount will get blocked in your account and you application process will be successful.

Conclusion

Is ASBA mandatory for IPO? To sum it up, yes it is compulsory. It has helped SEBI to regulate the process of IPO applications over the last few years. You can easily apply for an IPO through the ASBA process and wait for the allotment.

The best part about this is that the amount does not go anywhere and stays in your bank account.

However, you cannot use this amount till the time of the allotment.

If you want to apply for an IPO, you need a Demat account. So open your free Demat account today!