IPO ASBA Process is one of the most common ways to apply for an IPO these days. Most of the stockbrokers offer you with this IPO application provision. Furthermore, it is one of the simplest ways to invest in an IPO of your choice.
In this detailed review, we will have a look at the complete IPO ASBA process, eligibility requirements, online/offline processes, benefits and more.
IPO ASBA Process Basics
Before we talk about applying for an IPO through ASBA, we need to know what do we mean by ASBA.
ASBA or Application Supported by Blocked Amount is a mechanism by which a retail investor can get his or her amount in the savings account blocked until the shares in the IPO are allocated to him. This facility was launched by SEBI back in May 2010.
Since January 2016, SEBI has in fact made is mandatory for retail investors to apply for IPO ONLY through ASBA method.
The point is simple – if the shares are allocated to you, the corresponding amount will be deducted from your bank account. At the same time, in case you don’t get any IPO allocation, no amount will be deducted and the amount will be unblocked for your usage.
This also needs to be understood that when an IPO is opened up for bidding, there are different types of investors that can opt to invest:
Retail Individual Investors (RIIs)
Qualified Institutional Investors (QIBs)
Non-institutional Investors (NIIs)
General mass implies retail individual investors and they are one closest one to use ASBA for their IPO bidding.
Furthermore, this bidding happens through Self Certified Syndicate Banks (SCSBs) which satisfy the conditions laid out by SEBI. Investors looking to apply for an IPO have an account in any of these banks. In return, the banks look at:
Accepting IPO applications
Verify the applications
block the bid amount in the investor’s account
once verified, upload all the IPO application details to the bidding system of the exchange.
IPO ASBA Eligibility
Before you go ahead and apply for an IPO, you need to find whether you are eligible to use ASBA in the first place. Let’s see the different eligibility criteria:
You are an Indian national
You have an active Demat account with any depository participant out of CDSL or NSDL with a valid PAN card.
Your application is up to ₹2 Lakh for securities and shares (retail investors cannot apply for more than ₹2 Lakh)
You are and will not be bidding under any reserved categories
You will not revise your bidding
IPO ASBA Online Process
Now comes the meat of the discussion where we understand the different steps involved in the overall process of IPO application through ASBA.
Most of the prominent banks such as ICICI, HDFC, Axis etc provide online facility to apply for an IPO online.
You need to login into your bank account
Find the option of Demat and ASBA Services or IPO application
Fill in the form with the requisite details
Primarily you will need to enter PAN Number, Demat account number and IPO bidding details
Verify through OTP or registered email address
Submit the application details such as PAN Card, DP ID, Client ID, Bid quantity, Bank account number etc.
The requisite amount will now be blocked until the allotment is finalized. Obviously, you will not be able to use this amount for your own usage until it gets unblocked or allocated to your IPO shares.
IPO ASBA Offline Process
Well, in case your bank is still living in the primitive ages and does not offer online ASBA application, you can also go for offline ASBA as:
Find the closest branch of the bank and submit the form along with a copy of your PAN card
Obviously, the online application method is way easier as compared to the offline way. Thus, if you are going to regularly apply for IPOs, it’s better to open bank savings account with online ASBA provision.
IPO ASBA Benefits
Here are some of the positives of using ASBA for your IPO application:
You earn interest on the blocked funds till the time – either you get the shares or your blocked amount gets unblocked.
The amount is debited from your bank account only when the shares get allocated to your account.
You can submit up to 5 applications from a bank account using ASBA.
This process is completely free in nature and you are not required to pay anything to anyone in order to apply for an IPO.
You can easily cancel your IPO application before the closure of IPO bids. You can do this by simply sending a cancellation request to the registrars who will coordinate internally with the banks.
The same process can be used in applying for the right issues, follow-on public offers (FPOs) etc
No problems of refunds as the amount will be debited from the bank account only if the shares are allocated to you.
You don’t have to trust any third party since your own bank is part of the transaction
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IPO ASBA Process FAQs
Here are some of the frequency asked questions around the IPO ASBA mechanism:
Can I use the IPO ASBA process across all types of Initial public offerings?
No, this process is specifically designed for book-built offers as of now. SEBI, however, does some pilots every now and then with other kinds of offerings as well but at a limited level only.
What are the different ways in which IPO ASBA forms can be submitted?
You can avail both online as well as offline ways in order to apply for an IPO through ASBA as per your convenience. At the same time, it also depends on your bank whether they allow online ASBA or not. Having said that, most of the prominent banks do have that set-up in place for their clients.
Can I withdraw my IPO ASBA application once I have submitted all the forms and completed all the formalities?
Yes, you can do that! You must have your application number, transaction registration slip (which you get when you apply). With these details, you need to contact your bank through which you completed the formalities in the first place.
Internally, the registrars after receiving your withdrawal request will cancel your bid post document verification. They will further instruct to unblock your money in the bank account.
Under what circumstances can my IPO ASBA application be rejected?
Well, there could be multiple instances when such rejections can happen. Here are some of those:
Your bank account does not have the requisite amount for the IPO application in the first place.
Your application form has mistakes.
You have applied for the same IPO with multiple applications.
Details mentioned in your documentation and form are inconsistent.
Do I get some priority in IPO allocation if I apply through ASBA?
No, there is no such priority. Even if you apply through some other mechanism, your application will be treated as any other user.
Where can I get the IPO ASBA form in order to apply?
You can get the forms from the official websites of different exchanges i.e. NSE and BSE. The weblinks have been shared above in the application process section.
What if my application has some problems?
In case your IPO ASBA application has some issues or mistakes, your application will obviously be rejected. Furthermore, the amount blocked will be unblocked and won’t be used for any IPO allocation anymore.