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Application supported by blocked amount (ASBA)
 

Application supported by blocked amount (ASBA)

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    Application supported by blocked amount (ASBA) Application supported by blocked amount (ASBA) Presentation Transcript

    • 1 Application Supported by Blocked Amount (ASBA) By: Prof. Mallikarjun Bali BLDEA’s VP Dr. P G H CET Bijapur
    • 2 Facts and Figures BSE NSE Cash trading began in July, 1875 Nov., 1994 Derivatives trading began in June, 2000 June, 2000 Number of listed companies 5054 2476 Cities present in 324 1486 Market capitalization (Rs. In Cr.) 63.4 lakh 61.9 lakh
    • 3 How households shifted their savings: 2000-05 Others, 1.2 Shares and debentures, 2.8 Claims on government , 19.5 Currency , 8.9 Provident and pension fund, 15.1 Life insurance, 14.7 Bank Deposits, 37.8 2005-11 Bank Deposits, 49.9 Life insurance, 19.9 Provident and pension fund, 10.3 Currency , 10.7 Others, 1.4 Claims on government , 3.5 Shares and debentures, 4.3
    • 4 Introduction:  ASBA (Applications Supported by Blocked Amount) 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only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.  ASBA is an additional mode of payment introduced by SEBI in July 2008 for easing up the process of applying in the Public Offer and making the process more efficient. For the purpose, SEBI has amended the SEBI (Disclosure and Investor Protection) Guidelines, 2000. This process is available in all public issues made through the book building route. This process Co-Exists with the Current process where the cheques are used as a mode of payment.
    • 5 Key Features  Easy to apply in IPO/FPO/Rights Issue through Net Banking or Physical formate  Enjoys continued Returns on Blocked Amount  Option to revise/withdraw the bid
    • 6 Benefits of ASBA:  No loss of interest, since the application amount is not debited to the 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 Customer. In other words Five applications can be made from a bank account per issue.  Customer can revise/withdraw the bid before/after the end of the Issue in the prescribed format with the Bank.
    • 7 Who can avail ASBA facility? Any investor who satisfies the below conditions is eligible and can apply for shares under ASBA mode:  All Categories - Retail as well as Non-Retail Investors  Holds a savings/current account with the Self Certified Syndicate Bank (SCSB)  Has a valid PAN card.
    • 8 Process for Submitting Bid Through ASBA Mechanism  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 – • Submit the form physically with the Designated Branches (DBs) of the SCSB (Physical ASBA) or • Submit the form electronically through the internet banking facility offered by the SCSB (Electronic ASBA).  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 meet the application money, the ASBA shall be rejected by the SCSB.
    • 9 Process for Submitting Bid Through ASBA Mechanism (Cont.)  After accepting a Physical ASBA, the SCSB shall block funds available in the bank account specified in the Physical ASBA, to the extent of the application money specified in the ASBA. The SCSB shall then capture/upload the following details in the electronic bidding system provided by the Stock Exchanges(s) for the particular public issue: • Application number • DP ID, Client ID • Bid Quantity • PAN  In case of an Electronic ASBA, the ASBA investor himself/herself shall fill in all the above mentioned details, except the application number which shall be system generated. The SCSB shall thereafter upload all the above mentioned details in the electronic bidding system provided by the Stock Exchange(s).
    • 10 Process for Submitting Bid Through ASBA Mechanism (Cont.)  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 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.
    • 11 Process for Submitting Bid Through ASBA Mechanism (Cont.)  The SCSB shall send the following aggregate information to the Registrar to the Issue after closure of the biding period. • Total number of ASBAs uploaded by the SCSB • 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.  In case an investor wants to revise or withdraw his/her ASBA before the bid closer date, he/she can submit bid revision or withdrawal request to the DB  In case an ASBA investor wants 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.  The Registrar to the Issue shall finalize the basis of allotment and submit it to the Designated authority for approval.
    • 12 Process for Submitting Bid Through ASBA Mechanism (Cont.)  Once the basis of allotment is approved by the Designated authority, 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; • Number of shares to be allotted against each valid ASBA • Amount to be transferred from the relevant bank account to the issuer’s account, for each valid ASBA • The date by which the funds shall be transferred to the issuer’s account • 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.
    • 13 Process for Submitting Bid Through ASBA Mechanism (Cont.)  SCSBs shall unblock the relevant bank accounts for, • Transfer of requisite money to the issuer’s account against each valid ASBA • 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.
    • 14 Submission of ASBA Physically or Electronically to SCSB Blocking the Application Amount by SCSB in Specified Account Application Money to be Blocked until finalization of Allotment Uploading the Application Data by SCSB in the Electronic Bidding System On Allotment, Unblocking the Relevant Bank Account and Transfer of Requisite Amount Issuer’s Account Process for Submitting Bid Through ASBA Mechanism
    • 15 Differences between Existing and New Method: Particulars Existing Method New Method Submission of Bid Through the investor’s brokerage firm. Through the SEBI registered bankers. Payment Method Through the cheque and to be 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. Earning of Interest Here, the investor earns no interest. Here, the investor continues to earn interest as the amount is with the banker. Refund Here, the company will have to refund the amount to the investor within the time limit No question of refund. Impact of Listing As company can not list its 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.
    • 16 Suggestions for Popularizing ASBA  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. As such, it would be better to have a common form with a check-box for ASBA.  ASBA is available only with a few banks and that too with a selected branches.  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.
    • 17 Few Examples of Banks and Branches Offering ASBA Bank No. of Branches Branches offering the facility ICICI 2539 101 AXIS 1281 160 HDFC 2000 102 SBI 10039 1060
    • 18 SEBI Reforms  Recent reforms initiated by SEBI to boost retail participation 1. Retail investor limit has been hiked to Rs. 2 lakh from earlier limit of Rs. 1 lakh. 2. Now, retail investor can apply through an e-IPO. Under this, the applicant have to approach a broker with an application either in electronic or physical format. Brokers, will then punch their application on the system. Brokers will be remunerated by issuer companies for this mode. 3. To widen the shareholders base in public issues, SEBI plans to ensure that every retail participants gets a minimum bid lot irrespective of application size.
    • 19 SEBI Reforms (Cont.) 4. To help the issuing companies to raise capital, the average free float market capitalization requirement for FPO and Right issue has been reduced to Rs. 3,000 Cr. from Rs. 5,000 Cr. 5. The SEBI has allowed the use of Bonus and Right issues for companies wishing to comply with minimum public shareholding norms of 25% (the deadline for complying with this norm is June 2013). 6. Non-Retail Investors have been barred from withdrawing or lowering their bid size at any stage of public issues. However, they may increase their bid size. 7. For IPO, issuers are now required to furnish the price band 5 working days prior to issue opening as against the earlier 2 working days.
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