30 FAQs for IPO investment through ASBA for retail investors

ASBA is a facility for subscribing to an IPO by any retail investors. In this blog, I attempt to cover the essential concepts and questions related to Applications Supported by Blocked Amount (ASBA) facility. From January 2016, SEBI had made it mandatory to apply for an IPO through ASBA.

Q1. What is ASBA? Is it mandatory?

The full form of ASBA is ‘Application Supported by Blocked Amount’. It is an application that contains an authorization. This authorization is for blocking the application amount in your bank account, for subscribing to a public issue. This authorization for blocking your application money is done through Self Certified Syndicate Bank (SCSB). If you are applying through ASBA, your application money got debited from the bank account only if your application is selected for allotment. Of course, after the basis of allotment is finalized.

Yes, SEBI had made ASBA mandatory for IPOs after 1 January 2016.

Q2. What is Self Certified Syndicate Bank (SCSB)?

Self-certified Syndicate Bank, the SCSB is a bank which is recognized by SEBI as a bank which is capable to provide ASBA services to customers. SEBI website enlists the names of such banks and their branches and updates it regularly. You can always get the updated list os such SBSC banks and branches here.

Q3. What is an ASBA facility in a bank?

The ASBA facility in a bank that renders an investor the possibility to apply in any initial public offerings (IPOs), follow-on public offers (FPOs) and new fund offers (NFOs) of mutual funds. You can invest in any of the above instruments only with the blocking of the required amount from your bank account.

Q4. What is an ASBA bank account?

ASBA (Applications Supported by Blocked Amount) is a facility given to a retail investor. This facility is designed and developed by SEBI. Here, as an applicant, your account will be debited only after allotment of shares or the unit of an instrument you applied for. SEBI designated SCSB’s for this purpose by SEBI.

Q5. Who are “ASBA investors”?

An Investor who fulfills the following conditions are considered as ASBA investor –

1. a “Resident Retail Individual Investor”
2. is bidding at cut-off, with a single option as to the number of shares bid for
3. applying through blocking of funds in a bank account with the SCSB
4. has agreed not to revise his/her bid
5. is not bidding under any of the reserved categories

Q6. Can we make an application through ASBA on all issues?

Yes, we, the retail investors can make an application through ASBA facility in all the issues. Issues may be a public issue or a right issue.

Q7. What are the benefits of ASBA to retail investors?

The following are the important benefits to retail investors:

1. You do not pay application money by cheque. But the proportionate amount is blocked in your bank account. Thus, you continue to receive interest on your blocked amount.
2. There is no situation for refunds. In ASBA the proportionate amount is blocked in your account itself. And it is unblocked in case of non-allotment of the issue.
3. Very simple application form.
4. As an investor, you deal with your known intermediary. In the case of ASBA, you deal with your bank.
5. You do not lose interest. The blocked amount remains in your account earning interest even for the blocked period.
6. This blocked amount is also used in calculating Average Quarterly Balance (AQB).
7. You can also revise or withdraw your bid on any particular issue. But this you can do only before the end of the subscription and in a prescribed format only.

Q8. What makes you eligible to apply through ASBA?

According to the issues regulators, the SEBI has to specify the following regarding ASBA-

1. Public issues – All retail investors can apply through ASBA
2. Rights issues – All shareholders as on the record date are allowed to apply through ASBA. However, the applicant must hold shares in dematerialized form and must also apply for the issue in the dematerialized form

Further as an “ASBA investors” you must provide accurate information in the application regarding

1. PAN card number
2. DP ID (depository participant identification0 number
3. Client identification number or the Clients ID from your broker’s account 
4. Bid quantity for issue
5. Your bank account number

Q9. Can we withdraw an IPO application?

No, it is not possible to withdraw an IPO application. This is because as soon as you apply for IPO through ASBA, a block is created on your linked bank account for the application amount. This block is removed only after the allotment of the issue is over. However, you can cancel the IPO application. In case of cancellation, the blocked amount is released and only after it you can withdraw.

Q10. How can we cancel an IPO applied through ASBA?

You can cancel the IPO. but this is possible only before the end date of the IPO subscription. In general, you should follow the following steps to cancel the IPO you applied for –

1. Log in to your internet banking. Select an investment option.
2. Click on invest online.
3. Click on invest in IPO.  This you will find under online IPO option.
4. Submit the request.
5. Enter the values and then click on the submit button.
6. A confirmation page will appear. You need to verify and then click on the submit button.
7. After that select the option of the order book and click on the transaction ID.
8. Then you can click on the option of withdrawing your application.

Q11. Can we withdraw or modify our ASBA bids?

Yes, you can withdraw or modify your ASBA bids. During the bidding period, you can approach your bank. You have to request for withdrawal or modification through a duly signed letter citing your application number and TRS number.

However, if the bid is closed, then you have to send your withdrawal request to the registrars of the issue. They will cancel your bid. After that, they will instruct the SCSB to unblock your application money. This will be done only after the finalization of the basis of allotment.

Q12. In case of an issue fails or is withdrawn by the issuer, then what happens to my blocked amount?

In situations where the issue fails or is withdrawn by the issuer, the SCSB unblocks the application money from your bank accounts. But this is done only when the SCBS receives instructions from the Registrar of the issue.

Q13. How can we apply for an IPO through ASBA? 

You have two options to apply for an IPO through ASBA if you are an Indian resident. The two options are online mode and offline mode.

Under offline mode, you have to fill correctly the ASBA forms for the IPO. The ASBA form is available from BSE website, NSE website or from your SCSB branch. You need to fill correct information on your name, bank account number, your DP number and etc. The application gets rejected if there is any mismatch of information with your bank account orPAN information or even if the form remains incomplete. So give full attention while filling your application. After that, you need to submit your correctly filled application with your SCSB branch. The bank uploads your application or the application information in the bidding platform.

On the other hand, in case if you wish to apply online, you can do so electronically through online banking facility of your SCSB bank. Every net banking facility by an SCSB bank has similar features on their online portal. You can follow these simple steps for applying online through your internet banking facility-

1. Sign in your internet banking account
2. There will be a request op the left side menu and search for IPO application. Then click on it.
3. You will find the list of all the IPOs open for the subscription there. Select the IPO you want to apply.
4. Fill in your details and place and confirm the order.

Q14. Do we receive any acknowledgment after submitting applications through ASBA form?

Yes, of course, you will receive an acknowledgment of the forms submitted. Every SCSB requires providing a counterfoil as an acknowledgment after the submission of ASBA form. Also, an order number is generated at the time of uploading the application details. You can also request for it in case you need it. 

Q15. Where should we submit our ASBA form?

You should submit your duly filled ASBA form with your designated SCBS bank branches. This you need to do when you apply offline. Else, you can submit the duly filled application with your broker as well. But when you apply online, you need to apply through your online bank account facility. The list of SCSB is also given in the ASBA application form. You can also get details about SCSB on the blog – “ASBA – Key points to remember before applying for an IPO“

Q16. Can we submit ASBA form in any of the SCSB banks specified in the SEBI list?

No, you cannot submit your ASBA form to any of the SCSB banks specified in the SEBI list. You can only submit your ASBA form to the SCSB with which you are holding your bank account.

Q17. How many applications can we make from a single SCSB bank account?

You can make five applications per issue with your single SCSB bank account.

Q18. If we withdraw our bid made through ASBA, will our bank account be unblocked immediately?

When you withdrawal your ASBA during the bidding period, the SCSB deletes the bid and unblocks the application money in your bank account. However, when you withdraw bid after the bid closure date, then in such case the SCSB unblock the application money only after getting appropriate instruction from the Registrar of the issue. This is generally done after the finalization of the basis of allotment of the issue. It may take one or two weeks time.

Q19. Whether our bank account is blocked or only the amount equivalent to application money is blocked?

No, your entire bank account is not blocked. But only an amount equivalent to your application money is blocked in your bank account. You can use the balance amount of your account.

Q20. Do we need to have a DP account with the SCSB where we intend to submit our ASBA application?

No, you need not necessarily have to maintain your DP account with the SCSB. You can continue with your existing broker and existing DP account. The only thing you need to keep in your mind is to put correctly your DP number in the ASBA application which you are applying.

Q21. Are the bids submitted through ASBA uploaded in the electronic bidding system of the stock exchange? Are these bids in case of the public issue through book building, get reflected in the demand graphs displayed on the website of stock exchanges?

Yes, the bids made through ASBA is uploaded in the electronic bidding system. It is also reflected in the demand graphs displayed on the website of the stock exchanges.

Q22. In the case of the public issue who is responsible for errors in the data uploaded in the electronic bidding system?

Applicants are responsible for errors in case he/she furnish the wrong information in the application form. However, in case there is an error by SCSB in entering the data in the electronic bidding system of the stock exchanges, the SCSB is responsible.

Q23. Do we require to submit ASBA form only physically?

No, there are other means to submit ASBA forms as well. You can fill up the physical form and submit it to the SCSB or your trading member. Or you can apply electronically or online through the internet banking facility or online facility provided by your SCSB or the trading member.

Q24. Who should we approach if we find that we had given all correct details in the ASBA form, but the application has been rejected stating wrong data?

You need to approach the concerned SCSB for any complaints regarding your ASBA applications. It is mandatory for SCSB to reply within 15 days from the date of such complaints. However, if you are not satisfied, you always have an option to write to SEBI thereafter at the following address:

Investor Grievance Cell, Office of Investor Assistance and Education,

Securities and Exchange Board of India

Plot No.C4‐A,’G’ Block, Bandra Kurla Complex,

Bandra(East), Mumbai: 400051

Tel: +91‐22‐26449000 / 40459000

Fax: +91‐22‐26449016‐20 / 40459016‐20

Q25. If we have any complaints regarding ASBA application whom can we approach?

In case of any complaints regarding an ASBA application form, you should approach the SCSB bank, where you are submitting your application form. Or you can approach to the Registrars to the issue as well.

Q26. Suppose an applicant is having a bank account with a branch at Nagpur. Can he submit the IPO application through ASBA at a branch of the same bank in Delhi?

Yes, this is possible. However, the applicant needs to check that his bank has a core banking facility. Also, you need to submit the ASBA form to a branch which is identified as the SCSB branch.

Q27. Can we apply ASBA form using our current account? Also, is it possible to apply using a sweep in/out savings bank account?

No, you cannot apply an ASBA application for IPO through your current account. Your application will not get process. However, with a sweep in/out savings account you can apply. But you just need to ensure that, you require not to sweep the application amount for others purpose. There must be a clear minimum cash balance equal to the application amount with your account.

Q28. Can we apply in the name of family members & friends? Also, can we apply in on behalf of  Minor or HUF? Further, can we apply more than one application in our name from different savings bank accounts in the same bank or different banks?

Yes, you can apply in the name of family members & friends. Yes, you can make IPO applications on behalf of minor or HUF. However, the demat account should be in the name of minor or the HUF. And you need to be the minor’s guardians or Karta of the HUF, as the case may be.

But if you apply more than one application for any issue, your whole application will get rejected. No matter from different savings accounts from the same or different bank account.

Q29. When we have a joint DP account then who will be the primary applicant?

The IPO application always considers under the first name in the joint account. So always ensure to provide correct details of PAN, DP account, etc. for the first name in the application.

Q30. Is there any cutoff time for IPO applications through ASBA form?

For online IPO application through ASBA generally have 1 PM, 2 PM or 3 PM as the cut off time. You need to check it for an individual bank. As some banks extend the cut off time when there is a huge rush for the subscription. However, in case of physical application through brokers, it can be 5 PM or may also extend. Do not wait for the time extensions, always prefer to apply on time without delay.

A successful IPO bidding through ASBA requires to follow certain rules. Thes rules help you in receiving the allotment for the IPO. You must be cautious while you fill the application form, with the right quantity and bidding at the highest offer rate to be successful.

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