Apply IPO Application Process through ASBA

Initial Public Offerings are essential for investors looking to secure early entry into companies going public. But they must be familiar with the ASBA mechanism. It is a mechanism that allows investors to keep aside the money to support their IPO application. Let us discuss how to apply for an IPO through ASBA in India.

Topics Covered:

• What is ASBA?
• Benefits of Applying IPO Through ASBA
• Process to Apply IPO through ASBA – Step to Step Guide
• Eligibility Criteria to Apply IPO through ASBA

What is ASBA?

Application Supported by Blocked Amount (ASBA) is a mechanism for investors to apply for an IPO. You already know that there is no guarantee for allotment in such an offering. Many applications are rejected in the case of an oversubscription. ASBA is a secure mechanism that ensures investors get their money back upon non-allotment.

Before the emergence of ASBA, the Securities and Exchange Board of India (SEBI) used StockInvest. However, StockInvest did not receive positive reviews from investors, thus leading to its discontinuation. SEBI finally developed ASBA, a better mechanism for keeping investors’ money secure.

When you apply for an IPO through ASBA, the determined amount gets blocked in your account. The blocked money is used to purchase shares during allotment. Also, the money will be unblocked upon non-allotment. Submitting the IPO application through ASBA guarantees the safety of your money.

Benefits of Applying IPO Through ASBA

Now that you understand how to apply for an IPO through ASBA, let us discuss its benefits:

1) Interest on Blocked Amount

The money in your bank account is blocked through ASBA. When your application is rejected, the blocked amount in your account is freed. In such a case, you are eligible to receive interest on the amount. However, you cannot use the blocked amount for other purposes. The financial institution will treat the blocked amount as regular when your application is rejected, thus providing you with interest.

2) Easy Process

Once you learn how to apply through ASBA, you might never go back. It is a hassle-free process to apply for IPOs in India. One can easily use the ASBA mechanism to submit applications online. You don’t have to wait hours with the ASBA process

Additional Read: IPO Process in India

3) Guarantee of Money

The ASBA mechanism offers an extra layer of safety to Initial Public Offering (IPO) investors. The money is never debited from your bank account. It is only blocked for shares during allotment. When the application is rejected, the blocked amount is freed. Since the money never leaves the bank account, investors feel secure.

4) No Charge

Self Certified Syndicate Banks in India are allowed to facilitate IPOs through ASBA. All banks provide the ASBA service free of charge. You don’t have to pay a single rupee to apply for an upcoming IPO through ASBA. You will only pay for the number of shares applied in an IPO.

5) Paperless Process

You don’t have to indulge in hefty paperwork to apply for an IPO. One can easily submit their application online through ASBA.

Additional Read: SME IPOs Guide

Process to Apply IPO through ASBA – Step to Step Guide

Here is the detailed process of applying for a new IPO through ASBA:

Apply IPO through ASBA – Online Process

• You must have a bank account with a Self Certified Syndicate Bank in India. You must also have a Demat account to take the delivery of shares on an allotment.
• Open a Demat account and search for the IPO section.
• Select a preferred Initial Public Offering.
• Complete your application by choosing the lot size. You might also have to enter a price bid in case of a book-building issue.
• A mandate request will be generated to block the specified amount. Approve the mandate received from the bank to proceed with the application.
• An application ID will be generated upon approving the mandate. You must now wait for the allotment. When shares aren’t allotted, the blocked amount will be unblocked.

Apply IPO through ASBA – Online Process

• Visit your DPs physical branch and ask for an IPO application form.
• It is essential to research the upcoming IPOs before applying for one.
• Complete the application by providing details like name, lot size, PAN (Permanent Account Number), and Demat account number.
• It is crucial to provide accurate details in the application form. Your IPO application can be rejected due to inaccurate details.
• The DP will upload your application details online.
• The specified amount will be blocked, and you must wait for allotment. The blocked amount will be freed in case of non-allotment.

Additional Read: How to Check IPO Allotment Status?

Eligibility Criteria to Apply IPO through ASBA

You must fulfil some conditions to apply for a new IPO through ASBA, such as:

• One must be an Indian citizen to apply for a new IPO through ASBA.
• One cannot apply for an IPO through ASBA without a PAN card in India.
• You must have a Demat and a trading account. Your Demat account will be used for the delivery of shares during allotment.
• You must have a bank account with a Self Certified Syndicate Bank.
• Your bank account must have a sufficient amount to submit the IPO application through ASBA. The specified amount can’t be blocked when the account balance is low.

Final Words

One can apply for an IPO through ASBA in India. The specified amount for shares (as mentioned in your application) is blocked through ASBA. The amount will be unblocked when you don’t get the allotment. Check the latest IPOs and apply now!