Applying for an IPO? Know about ASBA and who can apply for it?
If you are an investor and applying for an initial public offering (IPO), then you need to know about certain things related to public issue.
If you are an investor and applying for an initial public offering (IPO), then you need to know about certain things related to public issue. One of the key facts related to IPO is ASBA (Applications Supported by Blocked Amount). It is a process developed by the financial market regulator SEBI to apply for an IPO. In ASBA, an IPO applicant's account doesn't get debited until shares are allotted to them.
An individual investor can apply through ASBA process in a public issue through book building route if:
- He/ she is a “Resident Retail Individual Investor” i.e. applying for shares/ securities up to Rs 1,00,000.
- Is bidding at cut-off, with single option as to the number of shares bid for
- Is applying through blocking of funds in a bank account with the self-certified syndicate bank (SCSB). SCSB is a bank which offers the facility of applying through the ASBA process.
- Has agreed not to revise his/her bid
- Is not bidding under any of the reserved categories
SEBI has permitted ASBA process in the rights issue on pilot basis. All shareholders of the company as on record date are permitted to use ASBA for making applications in rights issue if he/she/it:
- Is holding shares in dematerialised form and has applied for entitlements or additional shares in the issue in dematerialised form;
- Has not renounced its entitlements in full or in part
- Is not a renouncee to the Issue
- Applies through a bank account maintained with SCSBs.
Disclaimer: This story is for informational purposes only and should not be taken as investment advice.