Application Supported by Blocked Amount - A Bird Eye view
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This article provides an overview of Application Supported by Blocked Amount (ASBA), a new mechanism introduced by SEBI in 2008 for retail investors to apply for initial public offerings, rights issues, and follow-on public offers. Under ASBA, the application amount is blocked in the investor's bank account rather than paid upfront. If the application is selected, the amount is debited, otherwise it is unblocked. Key benefits for investors include earning interest on the blocked amount and faster refunds without waiting for allotment. The article defines ASBA and outlines the application and allotment process as well as eligibility and benefits for investors.
![Welcome to ISRJ
International Advisory Board
Mohammad Hailat
Dept. of Mathmatical Sciences,
University of South Carolina Aiken, Aiken SC
29801
Abdullah Sabbagh
Engineering Studies, Sydney
Catalina Neculai
University of Coventry, UK
Ecaterina Patrascu
Spiru Haret University, Bucharest
Loredana Bosca
Spiru Haret University, Romania
Fabricio Moraes de Almeida
Federal University of Rondonia, Brazil
George - Calin SERITAN
Postdoctoral Researcher
Hasan Baktir
English Language and Literature
Department, Kayseri
Ghayoor Abbas Chotana
Department of Chemistry, Lahore
University of Management Sciences [ PK
]
Anna Maria Constantinovici
AL. I. Cuza University, Romania
Horia Patrascu
Spiru Haret University, Bucharest,
Romania
Ilie Pintea,
Spiru Haret University, Romania
Xiaohua Yang
PhD, USA
Nawab Ali Khan
College of Business Administration
RNI MAHMUL/2011/38595
Flávio de São Pedro Filho
Federal University of Rondonia, Brazil
Kamani Perera
Regional Centre For Strategic Studies, Sri
Lanka
Janaki Sinnasamy
Librarian, University of Malaya [
Malaysia ]
Romona Mihaila
Spiru Haret University, Romania
Delia Serbescu
Spiru Haret University, Bucharest,
Romania
Anurag Misra
DBS College, Kanpur
Titus Pop
Pratap Vyamktrao Naikwade
ASP College Devrukh,Ratnagiri,MS India
R. R. Patil
Head Geology Department Solapur
University, Solapur
Rama Bhosale
Prin. and Jt. Director Higher Education,
Panvel
Salve R. N.
Department of Sociology, Shivaji
University, Kolhapur
Govind P. Shinde
Bharati Vidyapeeth School of Distance
Education Center, Navi Mumbai
Chakane Sanjay Dnyaneshwar
Arts, Science & Commerce College,
Indapur, Pune
Awadhesh Kumar Shirotriya
Secretary, Play India Play (Trust),Meerut
Iresh Swami
Ex - VC. Solapur University, Solapur
N.S. Dhaygude
Ex. Prin. Dayanand College, Solapur
Narendra Kadu
Jt. Director Higher Education, Pune
K. M. Bhandarkar
Praful Patel College of Education, Gondia
Sonal Singh
Vikram University, Ujjain
G. P. Patankar
S. D. M. Degree College, Honavar, Karnataka
Maj. S. Bakhtiar Choudhary
Director,Hyderabad AP India.
S.Parvathi Devi
Ph.D.-University of Allahabad
Sonal Singh
Rajendra Shendge
Director, B.C.U.D. Solapur University,
Solapur
R. R. Yalikar
Director Managment Institute, Solapur
Umesh Rajderkar
Head Humanities & Social Science
YCMOU, Nashik
S. R. Pandya
Head Education Dept. Mumbai University,
Mumbai
Alka Darshan Shrivastava
Shaskiya Snatkottar Mahavidyalaya, Dhar
Rahul Shriram Sudke
Devi Ahilya Vishwavidyalaya, Indore
S.KANNAN
Ph.D , Annamalai University,TN
Satish Kumar Kalhotra
Editorial Board
ISSN No.2230-7850
Indian Streams Research Journal is a multidisciplinary research journal, published monthly in English,
Hindi & Marathi Language. All research papers submitted to the journal will be double - blind peer reviewed
referred by members of the editorial Board readers will include investigator in universities, research institutes
government and industry with research interest in the general subjects.
Address:-Ashok Yakkaldevi 258/34, Raviwar Peth, Solapur - 413 005 Maharashtra, India
Cell : 9595 359 435, Ph No: 02172372010 Email: ayisrj@yahoo.in Website: www.isrj.net](https://image.slidesharecdn.com/asba-141013020808-conversion-gate02/85/Application-Supported-by-Blocked-Amount-A-Bird-Eye-view-2-320.jpg)
![Indian Streams Research Journal
ISSN:-2230-7850 Available online at www.isrj.net
ORIGINAL ARTICLE
Volume 3, Issue. 4, May. 2013
APPLICATION SUPPORTED BY BLOCKED AMOUNT
Department of Management Studies,BLDEA's V P Dr. P. G. Halakatti College of Engg & Tech.,
Chairman and Dean, Department of Commerce and Management,
Karnataka State Woman's University,Plot No-84, Vivek Nagar West,
Abstract:
(ASBA) – A BIRD'S EYE VIEW
MALLIKARJUN BALI AND S. B. KAMASHETTY
Assistant Professor,
Ashram Road,Bijapur.Karnataka.
Jalnagar Main Road, Bijapur,Karnataka.
2008, a new mode called Application Supported by Blocked Amount (ASBA) for
submitting bid for Initial Public Offer (IPOs), Follow-on Public Offer (FPOs) and Right
Issue (RIs). With the introduction of this mode, the Retail investors have an option to
submit bid either through existing mode or through this new mode. Under the
conventional mode, retail investors have to pay the application money while submitting
bid. However, under this new mechanism, the investor need not pay application amount
upfront, where as, the banker simply blocks the application amount in investors account.
The new move will enable the investors to earn interest on the money so blocked besides
making the issue process more efficient and less time consuming.
KEY WORDS:
The market regulator (SEBI) has introduced, vide its circular dated July 30,
Application , Blocked , Bird's Eye , ASBA.
INTRODUCTION
This mode is available to the investors for only such issues which are being made through book
built route.
This is an additional method of payment, available to all categories of investors through
participatory banks (SCSB's). The purpose of adding this new payment option is to reduce the turn around
time for Stock listing and to make the refund process faster.
Technically there is no refund process for this kind of payment option as only the required money
for allocated shares is withdrawn from the investors account. Investor can use the remaining money as soon
as the required money is withdrawn and the money gets unblocked. As companies cannot list there shares
before completing the refund process, ASBA will reduce their load on refund process and ultimately will
make the listing process faster.
WHAT IS ASBA?
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.
Title APPLICATION SUPPORTED BY BLOCKED AMOUNT (ASBA) – A BIRD'S EYE VIEW
Source:Indian Streams Research Journal [2230-7850] MALLIKARJUN BALI AND S. B. KAMASHETTY yr:2013 vol:3 iss:4
.](https://image.slidesharecdn.com/asba-141013020808-conversion-gate02/85/Application-Supported-by-Blocked-Amount-A-Bird-Eye-view-3-320.jpg)
Application Supported by Blocked Amount - A Bird Eye view
- 1. ORIGINAL ARTICLE ISSN No : 2230-7850 Monthly Multidisciplinary Research Journal Indian Streams Research Journal Executive Editor Ashok Yakkaldevi Editor-in-chief H.N.Jagtap Vol 3 Issue 4 May 2013
- 2. Welcome to ISRJ International Advisory Board Mohammad Hailat Dept. of Mathmatical Sciences, University of South Carolina Aiken, Aiken SC 29801 Abdullah Sabbagh Engineering Studies, Sydney Catalina Neculai University of Coventry, UK Ecaterina Patrascu Spiru Haret University, Bucharest Loredana Bosca Spiru Haret University, Romania Fabricio Moraes de Almeida Federal University of Rondonia, Brazil George - Calin SERITAN Postdoctoral Researcher Hasan Baktir English Language and Literature Department, Kayseri Ghayoor Abbas Chotana Department of Chemistry, Lahore University of Management Sciences [ PK ] Anna Maria Constantinovici AL. I. Cuza University, Romania Horia Patrascu Spiru Haret University, Bucharest, Romania Ilie Pintea, Spiru Haret University, Romania Xiaohua Yang PhD, USA Nawab Ali Khan College of Business Administration RNI MAHMUL/2011/38595 Flávio de São Pedro Filho Federal University of Rondonia, Brazil Kamani Perera Regional Centre For Strategic Studies, Sri Lanka Janaki Sinnasamy Librarian, University of Malaya [ Malaysia ] Romona Mihaila Spiru Haret University, Romania Delia Serbescu Spiru Haret University, Bucharest, Romania Anurag Misra DBS College, Kanpur Titus Pop Pratap Vyamktrao Naikwade ASP College Devrukh,Ratnagiri,MS India R. R. Patil Head Geology Department Solapur University, Solapur Rama Bhosale Prin. and Jt. Director Higher Education, Panvel Salve R. N. Department of Sociology, Shivaji University, Kolhapur Govind P. Shinde Bharati Vidyapeeth School of Distance Education Center, Navi Mumbai Chakane Sanjay Dnyaneshwar Arts, Science & Commerce College, Indapur, Pune Awadhesh Kumar Shirotriya Secretary, Play India Play (Trust),Meerut Iresh Swami Ex - VC. Solapur University, Solapur N.S. Dhaygude Ex. Prin. Dayanand College, Solapur Narendra Kadu Jt. Director Higher Education, Pune K. M. Bhandarkar Praful Patel College of Education, Gondia Sonal Singh Vikram University, Ujjain G. P. Patankar S. D. M. Degree College, Honavar, Karnataka Maj. S. Bakhtiar Choudhary Director,Hyderabad AP India. S.Parvathi Devi Ph.D.-University of Allahabad Sonal Singh Rajendra Shendge Director, B.C.U.D. Solapur University, Solapur R. R. Yalikar Director Managment Institute, Solapur Umesh Rajderkar Head Humanities & Social Science YCMOU, Nashik S. R. Pandya Head Education Dept. Mumbai University, Mumbai Alka Darshan Shrivastava Shaskiya Snatkottar Mahavidyalaya, Dhar Rahul Shriram Sudke Devi Ahilya Vishwavidyalaya, Indore S.KANNAN Ph.D , Annamalai University,TN Satish Kumar Kalhotra Editorial Board ISSN No.2230-7850 Indian Streams Research Journal is a multidisciplinary research journal, published monthly in English, Hindi & Marathi Language. All research papers submitted to the journal will be double - blind peer reviewed referred by members of the editorial Board readers will include investigator in universities, research institutes government and industry with research interest in the general subjects. Address:-Ashok Yakkaldevi 258/34, Raviwar Peth, Solapur - 413 005 Maharashtra, India Cell : 9595 359 435, Ph No: 02172372010 Email: ayisrj@yahoo.in Website: www.isrj.net
- 3. Indian Streams Research Journal ISSN:-2230-7850 Available online at www.isrj.net ORIGINAL ARTICLE Volume 3, Issue. 4, May. 2013 APPLICATION SUPPORTED BY BLOCKED AMOUNT Department of Management Studies,BLDEA's V P Dr. P. G. Halakatti College of Engg & Tech., Chairman and Dean, Department of Commerce and Management, Karnataka State Woman's University,Plot No-84, Vivek Nagar West, Abstract: (ASBA) – A BIRD'S EYE VIEW MALLIKARJUN BALI AND S. B. KAMASHETTY Assistant Professor, Ashram Road,Bijapur.Karnataka. Jalnagar Main Road, Bijapur,Karnataka. 2008, a new mode called Application Supported by Blocked Amount (ASBA) for submitting bid for Initial Public Offer (IPOs), Follow-on Public Offer (FPOs) and Right Issue (RIs). With the introduction of this mode, the Retail investors have an option to submit bid either through existing mode or through this new mode. Under the conventional mode, retail investors have to pay the application money while submitting bid. However, under this new mechanism, the investor need not pay application amount upfront, where as, the banker simply blocks the application amount in investors account. The new move will enable the investors to earn interest on the money so blocked besides making the issue process more efficient and less time consuming. KEY WORDS: The market regulator (SEBI) has introduced, vide its circular dated July 30, Application , Blocked , Bird's Eye , ASBA. INTRODUCTION This mode is available to the investors for only such issues which are being made through book built route. This is an additional method of payment, available to all categories of investors through participatory banks (SCSB's). The purpose of adding this new payment option is to reduce the turn around time for Stock listing and to make the refund process faster. Technically there is no refund process for this kind of payment option as only the required money for allocated shares is withdrawn from the investors account. Investor can use the remaining money as soon as the required money is withdrawn and the money gets unblocked. As companies cannot list there shares before completing the refund process, ASBA will reduce their load on refund process and ultimately will make the listing process faster. WHAT IS ASBA? 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. Title APPLICATION SUPPORTED BY BLOCKED AMOUNT (ASBA) – A BIRD'S EYE VIEW Source:Indian Streams Research Journal [2230-7850] MALLIKARJUN BALI AND S. B. KAMASHETTY yr:2013 vol:3 iss:4 .
- 4. ASBA is a supplementary process of applying in public issues. It co-exists with the normal process of using cheque as a mode of payment while submitting the applications. Banks provide this value added service free of cost. Therefore, it makes sense for the investors to avail this facility and avoid hassle of waiting for refund orders in case of non-allotment or partial allotment of shares applied for. Earlier Qualified Institutional Buyers (QIBs) are not allowed to participate in IPOs through ASBA facility. Currently, as per SEBI guidelines all Non-Retail investors i.e. Qualified Institutional Buyers and Non-Institutional Investors, making application in public/ rights issue shall mandatorily make use of ASBA facility. KEY FEATURES ASBA is an application for subscribing to an issue, containing an authorisation to block the application money in a bank account A bank which desirous to offer this facility has to get itself registered with SEBI and such bank is called as Self Supported Syndicate Bank (SCSB) Easy to apply in IPO, FPO and Rights Issues. Enjoy continued Returns on Blocked Amount. Option to revise/withdraw the bid. INVESTORS BENEFITS FROM ASBA No loss of interest, since the application amount is not debited to the CASA (current and savings account) on application. The amount for which no shares have been allotted is available immediately on completion of allotment process. There is no need to wait for the amount to be refunded by the company and be credited to the account. Since the amount is available in the account, it is considered for calculation of the Average Quarterly Balance (AQB). Multiple bidding facility is available to the Investors. Investors can revise/withdraw the bid before the end of the Issue in the prescribed format. Investors deals with the known intermediary The ASBA form is simpler than existing one.Who can use ASBA? Any investor who satisfies the below conditions is eligible and can apply for shares under ASBA mode: All Categories of investors- both retail as well as non-retail investors Holds a savings/current account with the SCSB. Has a valid PAN Mechanism for filling bid and allotment · An ASBA investor, intending to subscribe to a book built public issue, shall submit a completed ASBA form to a Self Certified Syndicate Bank (SCSB), with whom the bank account is maintained, through one of the following modes – a)Submit the form physically with the Designated Branches (DBs) of the SCSB (Physical ASBA) or b)Submit the form electronically through the internet banking facility offered by the SCSB (Electronic ASBA) It is interesting to note that the investors need not necessarily to have both Demat account and Bank account with the same banker. · The SCSB shall give an acknowledgement specifying the application number to the ASBA investor, as a proof of having accepted his/her ASBA in a physical or electronic mode. · If the bank account specified in the ASBA does not have sufficient credit balance to cover the application money, the ASBA shall be rejected by the SCSB · After accepting ASBA form, the SCSB uploads the details like, application number, DP ID, Client ID, Bid Quantity, Bid Price, PAN etc, in the electronic bidding system provided by the Stock Exchanges(s) for the particular public issues. · The SCSB (Controlling Branch (CB) or DBs) shall generate a Transaction Registration Slip/ Order number, confirming upload of ASBA details in the electronic bidding system of the Stock Exchange(s). The Transaction Registration Slip/Order number shall be given to the ASBA investor as a 2 APPLICATION SUPPORTED BY BLOCKED AMOUNT (ASBA) – A BIRD'S EYE VIEW Indian Streams Research Journal • Volume 3 Issue 4 • May 2013
- 5. APPLICATION SUPPORTED BY BLOCKED AMOUNT (ASBA) – A BIRD'S EYE VIEW proof of uploading the details of ASBA, only on demand. · In case an ASBA investor wants to withdraw his/her ASBA during the bidding period, he/she shall submit his/her withdrawal request to the SCSB, which shall do the necessary, including deletion of details of the withdrawn ASBA from the electronic bidding system of the Stock Exchange(s) and unblocking of funds in the relevant bank account. The Stock Exchange(s) shall make available the updated electronic bid file to the Registrar to the Issue. The SCSB shall send the following aggregate information to the Registrar to the Issue after closure of the biding period. 1)Total number of ASBAs uploaded by the SCSB 2)Total number of shares and total amount blocked against the uploaded ASBAs. The Registrar to the Issue shall inform each SCSB about errors, if any, in the bid details, along with an advice to send the rectified data within the time as specified by the Registrar. If a retail investor wishes to withdraw his/her ASBA after the bid closing date, he/she shall submit the withdrawal request to the Registrar to the Issue. The Registrar shall delete the withdrawn bid from the bid file. But, Non-retail investor cannot withdraw the bid, however, they can make revision that too upward revision. The Registrar to the Issue shall reject multiple ASBAs determined as such, based on common PAN. The Registrar to the Issue shall finalize the basis of allotment and submit it to the Designated Stock Exchange for approval. Once the basis of allotment is approved by the Designated Stock Exchange, the Registrar to the Issue shall provide the following details to the CB of each SCSB, along with instructions to unblock the relevant bank accounts and transfer within the timelines specified in the ASBA process; 1)Number of shares to be allotted against each valid ASBA 2)Amount to be transferred from the relevant bank account to the issuer's account, for each valid ASBA 3)The date by which the funds shall be transferred to the issuer's account 4)Details of rejected ASBAs, if any, along with reasons for rejection and details of withdrawn/unsuccessful ASBAs, if any, to enable SCSBs to unblock the respective bank accounts. SCSBs shall unblock the relevant bank accounts for, 1)Transfer of requisite money to the issuer's account against each valid ASBA 2)Withdrawn/rejected/unsuccessful ASBAs The CB of each SCSB shall confirm the transfer of requisite money against each successful ASBA to the Registrar to the Issue. The Registrar to the Issue shall credit the shares to the demat account of the successful ASBA investors. This new mode offers several benefits to the investing community over the traditional mode of applying bid. (Table No. 1) Indian Streams Research Journal • Volume 3 Issue 4 • May 2013 3
- 6. APPLICATION SUPPORTED BY BLOCKED AMOUNT (ASBA) – A BIRD'S EYE VIEW Table No-1 Exhibit showing the differences between Existing and New mode of submission of bid Particulars Existing Method New Method Submission of Bid Through the investor’s Payment Method Through the cheque and to be Earning of Interest The investor earns no interest. The investor continues to Refund The company will have to Impact of Listing As company cannot list its Commission It goes only to the broker It is shared by both broker CONCLUSION: brokerage firm. Through the SEBI registered bankers. submitted along with application. It is not necessary to make payment at the time of submitting of bid. However, the banker will simply block the amount at the time of uploading the details in the bidding platform. earn interest as the amount is with the banker. refund the amount to the investor within the time limit No question of refund. share before entire process of issue is completed including refund, which delays the listing. As there is no question of refunding, so it causes no delay for listing. and banker. Though the market regulator has introduced ASBA to facilitate the primary market issue process, but, there are some gray areas, which it has to look into, to increase the usage of this facility for applying bid. At present, there are two separate forms printed with separate colour codes – one for ASBA and another for non-ASBA applicant. Having two different forms may lead to a situation where ASBA forms may not be available in far-flung cities, which may force investor to submit bid through the existing mode. As such, it would be better to have a common form with a check-box for ASBA. As of now, this facility is being offered only by few banks and that too few branches of such banks. When the ASBA mode was introduced the applications coming through this mode was very insignificant (1% of total application). Now this facility is hovering at around 25% of the total application. However, this 25% does not indicate significant popularity of this new mode of applying bid. This trend will continue unless all banks takes part in this process and make it mandatory for retail investors too. ASBA continues to be poorly advertised, if it is promoted well, both investor and banker will realize that it is a win-win for all. REFERENCE: Business world Various issues of The Economic Times news paper Various issues of The Business Line news paper Various issues of Financial Express Various issues of Business Standard www.sebi.gov.in www.chittorgarh.com/newportal/ipo Indian Streams Research Journal • Volume 3 Issue 4 • May 2013 4
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