Additional mode of payment through Applications Supported by Blocked Amount (ASBA)
Summary
SEBI introduced the Applications Supported by Blocked Amount (ASBA) process as a supplementary payment mode for public issues to enhance efficiency. The ASBA mechanism allows eligible resident retail investors to block application funds in their bank accounts until allotment or rejection. Self Certified Syndicate Banks (SCSBs) are authorized to facilitate this process, subject to registration and compliance with specific operational obligations. This section details the step-by-step procedure for the Applications Supported by Blocked Amount (ASBA) process, covering submission, fund blocking, and allotment. It outlines specific obligations for Self Certified Syndicate Banks (SCSBs), Stock Exchanges, and Registrars to ensure data integrity and timely processing. Additionally, it specifies the mandatory contents of the ASBA application form and investor declarations. This section outlines the specific roles and responsibilities of registrars, Self Certified Syndicate Banks (SCSBs), merchant bankers, and stock exchanges within the ASBA process. It details operational requirements such as data matching, fund blocking, allotment instructions, and complaint redressal mechanisms. The text
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SEBI has decided to introduce a supplementary process of applying in public issues, viz., the “Applications Supported by Blocked Amount (ASBA)” process. The SEBI (Disclosure and Investor Protection) Guidelines, 2000 have since been amended to provide for the ASBA process.
The ASBA process shall be available in all public issues made through the book building route. It shall co-exist with the current process, wherein cheque is used as a mode of payment.
ASBA is an application for subscribing to an issue, containing an authorisation to block the application money in a bank account.
A bank desirous of offering ASBA facility shall submit a certificate to SEBI as per the format given in Annexure I, for inclusion of its name in SEBI’s list of SCSBs. ASBAs can be accepted only by SCSBs, whose names appear in the list of SCSBs displayed in SEBI”s website.
On inclusion in the list of SCSBs, a bank shall commence its activities as an SCSB w.e.f. the 1st or 15th of a month, whichever is earlier, from the date of such inclusion. It shall then be deemed to have entered into an agreement with the issuer and shall be required to offer the ASBA facility to all its account holders for all issues to which ASBA process is applicable.
A SCSB shall identify its Designated Branches (DBs) at which an ASBA investor shall submit ASBA and shall also identify the Controlling Branch (CB) which shall act as a coordinating branch for the Registrar to the Issue, Stock Exchanges and Merchant Bankers.
The SCSB shall communicate the following details to Stock Exchanges for making it available on their respective websites; these details shall also be made available by the SCSB on its website: (i) Name and address of the SCSB (ii) Addresses of DBs and CB and other details such as telephone number, fax number and email ids. (iii) Name and contact details of a nodal officer at a senior level from the CB.
An Investor shall be eligible to apply through ASBA process, if he/ she : (i) is a “Resident Retail Individual Investor”; (ii) is bidding at cut-off, with single option as to the number of shares bid for; (iii) is applying through blocking of funds in a bank account with the SCSB; (iv) has agreed not to revise his/her bid; (v) is not bidding under any of the reserved categories.
An ASBA investor shall submit an ASBA physically or electronically through the internet banking facility, to the SCSB with whom the bank account to be blocked, is maintained. The SCSB shall then block the application money in the bank account specified in the ASBA, on the basis of an authorisation to this effect given by the account holder in the ASBA.
The application money shall remain blocked in the bank account till finalisation of the basis of allotment in the issue or till withdrawal/ failure of the issue or till withdrawal/ rejection of the application, as the case may be. Once the basis of allotment is finalized, the Registrar to the Issue shall send an appropriate request to the SCSB for unblocking the relevant bank accounts and for transferring the requisite amount to the issuer’s account.
The application data shall thereafter be uploaded by the SCSB in the electronic bidding system through a web enabled interface provided by the Stock Exchanges.
The issuer shall ensure that adequate arrangements are made by the Registrar to the Issue to obtain information about all ASBAs and to treat these applications similar to non-ASBA applications while finalizing the basis of allotment, as per the procedure specified in the Guidelines.
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Source: SecMarx — Additional mode of payment through Applications Supported by Blocked Amount (ASBA). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.