Subscribing to an Initial Public Offering (IPO) is an effective strategy to invest in an organisation that demonstrates solid potential for growth. Moreover, applying for an IPO has become easier than ever. You no longer have to go to a broker’s office to fill out paperwork and submit documents. Now, you can simply apply through ASBA (Application Supported by Blocked Amount), which is efficient and quick. It is provided on both online and offline platforms.
In this article, we will cover some important points about IPO application through ASBA, its eligibility criteria, and more.
What is ASBA?
Developed by the Securities and Exchange Board of India (SEBI), ASBA has made the IPO application procedure more streamlined. In this system, you permit a Self Certified Syndicate Bank (SCSB) to block a mark lien, i.e., the amount you will use to bid on a particular IPO. During the IPO allotment process, the application money is debited from your bank account, and the shares are credited to your demat account. However, if the IPO issue is not allocated to you or you choose to withdraw it, your funds will be returned to your bank account. Initially, only Qualified Institutional Buyers could apply for IPOs via ASBA, but now, all investors can employ ASBA for their IPO bids.
How to apply to an IPO through ASBA?
Both online and offline IPO applications through ASBA are accepted.
1. Online process
- Visit your bank website to access net banking services and log into your account.
- Open the ‘Demat Services’ tab and select the ‘New IPO/IPO Application’ option.
- Choose the new IPO issue from the list of open issues.
- Key in the lot size (quantity) and price, and then submit your bid.
- Approve the bank’s mandate request to block the bid amount.
- Once your application is accepted, you will receive an application ID. Retain this ID for any future references.
2. Offline process
- Get a print of the ASBA form to submit to your bank. You can download this form from the Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE) website.
- Fill out the details in the paperwork like your name, PAN, demat account number, bid price, lot size, and additional mandatory information.
- Sign a mandate form that instructs your bank to block the amount.
- Besides the necessary forms, submit a cheque to block the mark lien.
- After you submit the form, the bank will upload your application to the bidding platform. So, make sure that all the details added to your paperwork are accurate, or the application will be declined.
- After successfully uploading the form, the proposed amount will be blocked in your bank account till the share allotment is finalised.
