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

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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.
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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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