How to Apply for an IPO through ASBA? Step-by-Step Guide

ASBA stands for Application Supported by Blocked Amount, a SEBI Investor process that lets you apply for an IPO by blocking funds in your bank account instead of paying upfront. The ASBA is used by all, like retail investors, non-institutional investors and qualified institutional buyers.

What is ASBA?

Applying for an IPO through ASBA allows eligible investors to block the required application amount in their bank account instead of paying the money upfront. The amount is debited only to the extent applicable after allotment, while the remaining blocked amount is released. This guide explains what ASBA means, who can use it and how to apply for an IPO through ASBA online and offline.

ASBA (Application Supported by Blocked Amount) allows eligible investors to apply for an IPO by blocking the required application amount in their bank account instead of transferring it upfront. If shares are allotted, the applicable amount is debited; if there is no or partial allotment, the relevant blocked amount is released.

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. The important point is that the money remains in the investor’s bank account while blocked, rather than being transferred to the issuer at application stage. 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 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.

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.

Online & Offline Process to Apply IPO through ASBA

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

How to Apply for an IPO through ASBA Online?

• 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.

How to Apply for an IPO through ASBA Offline?

• 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?

What Do You Need to Apply for an IPO Through ASBA?

Here are the documents needed to apply for an IPO through ASBA:

• PAN
• Demat account details
• Bank account details
• Registered mobile number
• UPI ID, where applying through UPI
• Sufficient funds
• Investor/category details
• IPO bid details

Who Can Apply for an IPO Through ASBA?

• Retail Individual Investors
• Non-Institutional Investors
• Qualified Institutional Buyers
• Employees, where applicable
• Other eligible categories specified in the offer document

ASBA vs UPI for IPO Applications

ASBA and UPI are both used for IPO applications, but their application and fund-blocking processes differ. The table below highlights the key differences between applying through ASBA and UPI.

Feature	ASBA through Bank	UPI-based IPO Application
Payment mechanism	Bank blocks funds	UPI mandate blocks funds
Application route	Bank/SCSB	Broker/DP/RTA/intermediary, depending on route
Funds	Remain blocked in bank account	Remain blocked through UPI mandate
Authorisation	Bank/application process	UPI mandate authorisation
Suitable for	Investors using bank ASBA	Investors preferring digital UPI applications

Read also: How to Apply for IPO Using UPI ID?

Why Can an ASBA IPO Application Be Rejected?

• Incorrect PAN
• Incorrect Demat details
• Incorrect bank details
• Insufficient funds
• Invalid/incorrect UPI details where applicable
• Multiple applications in the same PAN
• Third-party bank account/UPI ID
• Invalid bid details
• Failure to authorise the UPI mandate within the applicable timeframe
• Technical issues
• Other rejection conditions specified in the IPO’s offer documents

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!