A Guide To Indian Stock Market IPO Process

The IPO applying process for Indian stocks had been a nightmare for retail investors few years back. Investors had to collect and fill up the lengthy form, deposit the cheque and wait for allotment process. It was taking months time to refund the amount in case the stocks were not allotted. But now the whole process has been simplified. This post details about the terms and process related with Indian stock market IPO.


What is “ASBA”?
ASBA means “Application Supported by Blocked Amount”. ASBA is an application containing an authorization to block the application money in the bank account, for subscribing to an issue. If an investor is applying through ASBA, his application money shall  be  debited  from  the  bank  account  only  if  his/her  application  is  selected  for
allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.

Who are Self Certified Syndicate Banks (SCSBs)?
Self Certified Syndicate Banks are banks which are certified by SEBI, allow retail individual investor to apply in IPO's using ASBA payment method. These banks have capability to block the IPO Application amount until IPO allotments are done. SCSB guarantee the Issuer Company for the blocked money and make sure that it's not being used for any other purpose. Now a days all major banks are Self Certified Syndicate Banks.

Detailed procedure of applying in IPO through ASBA.
Under ASBA facility, investors can apply in any public/ rights issues by using their bank account. ASBA form has been integrated to most of the online banks like SBI, ICICI, HDFC etc.  Investors  shall ensure that the details that are filled in the ASBA form are correct otherwise the form is liable to be rejected

What advantage an investor has in applying through ASBA?
Applying through ASBA facility has the following advantages:
  • The  investor  continues  to  earn  interest  on  the application  money  as  the  same remains in the bank account.
  • The investor does not have to bother about refunds, as in ASBA only that much money to the extent required for allotment of securities, is taken from the bank account only  when  his  application  is  selected  for  allotment  after  the  basis  of  allotment  is finalized.

Is it mandatory to apply through ASBA only?
It is mandatory for all public issues opening on or  after January 01, 2016

How many applications can be made from a bank account?
Five (5) applications can be made from a bank account per issue. It doesn't mean that an investor can apply/bid 5 lots. But, by using one bank account, investor can apply for different individuals, say wife, son, friend etc. But money for all applications will be deducted from the same account.

Whether my bank account will be blocked or only the amount to the extent of application money is blocked?
No.  the  entire  bank  account  will  not  be  blocked.  Only  the  amount  to  the  extent  of application money authorized in the ASBA will be blocked in the bank account. The balance money, if any, in the account can still be used for other purposes.

How to apply for IPO using ASBA using bank account?
Kindly visit this post to understand the step by step process of IPO applying process from onlinesbi.com

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