What is ASBA: Application Supported by Blocked Amount

What is ASBA: Application Supported by Blocked Amount 

The ASBA full form is Application Supported by Blocked Amount, and it refers to a facility used while applying for an Initial Public Offering (IPO). Under ASBA, the application fund stays blocked in the investor’s bank account instead of being paid upfront. This method is generally used to make the IPO application process more organised and transparent. It also helps ensure that funds are used only if shares are allotted. This article explains how ASBA works, how to apply, eligibility conditions, and its key benefits in a simple manner. 

How Does ASBA Work? 

To understand the process clearly, it helps to know what is ASBA and how it functions during an IPO application. The following information explains how ASBA usually works. 

IPO Application Process 
The investor applies for an IPO through a bank that offers the ASBA facility. The application includes bid details and Demat account information. 

Blocking of Application Amount 
After the application is submitted, the bank blocks the required amount in the investor’s bank account. The fund remains in the account and cannot be used for other transactions. 

Upload of Application Details 
The bank forwards the application details to the stock exchange through the official bidding system for further processing. 

Verification by the Stock Exchange 
The stock exchange reviews all ASBA applications and processes them as part of the IPO allotment procedure. 

Debit or Release of Funds 
Once allotment is finalised, the amount for allotted shares is debited from the account. If no shares are allotted, the blocked amount is released automatically. 

The Process for Applying to ASBA 

After understanding the ASBA meaning and working, this section explains the process for applying to ASBA. It can be done through both online and offline methods. Below is a simple explanation of how both methods usually work. 

Online ASBA Application Process 

• The process begins when the investor logs in to the net banking account of a bank that provides ASBA services. 
• From the IPO application section, the investor selects the desired public issue available for bidding. 
• The investor then enters bid details and provides the Demat account information required for share credit. 
• After reviewing the information, the application is submitted through the banking platform. 
• Once the application is submitted, the bank blocks the application amount in the investor’s account until the allotment is finalised. 

Offline ASBA Application Process 

• The process starts with downloading the ASBA application form from the official website of the stock exchange. 
• The investor fills in personal details like PAN card details, Demat account number, and bid-related information carefully. 
• Bank account details, including the IFSC, are entered to enable the fund-blocking process. 
• The completed form is submitted at a Self-Certified Syndicate Bank branch. 
• After submission, the bank uploads the application details to the bidding system and blocks the required amount in the investor’s account. 

ASBA Eligibility Requirements 

To apply smoothly for ASBA, along with understanding what is ASBA an individuals must also know who can use it. The basic eligibility requirements are listed below: 

Bank Account with an SCSB 
The investor should have an account with a Self-Certified Syndicate Bank that supports ASBA. 

Demat Account Requirement 
A valid Demat account is required as IPO shares are credited electronically. 

Permanent Account Number (PAN) 
A valid PAN is needed for regulatory and identification purposes. 

Sufficient Account Balance 
The bank must be able to block the required application amount at the time of applying. 

Eligible Investor Categories 
Both individual and non-individual investors may use ASBA if conditions are met. 

Why Was ASBA Implemented? 

ASBA was introduced to address some common issues seen in the traditional IPO application process and to make the overall system more organised. 

• Earlier, investors had to transfer money upfront, which could remain unused for a period, and ASBA was introduced to reduce this concern. 
• Refund delays were a common issue in IPOs, and ASBA was designed to help limit such situations. 
• The process was also aimed at improving transparency so investors could easily track their applications. 
• Manual paperwork and physical handling of applications were gradually reduced through this system. 
• Banks and stock exchanges were able to monitor applications more efficiently through a centralised process. 

Benefits of ASBA 

Understanding what is ASBA also highlights why many investors prefer this method. Some commonly observed benefits include: 

The application amount remains in the investor’s bank account until allotment. 

Funds are debited only if shares are allotted. 

The process is considered more systematic and transparent. 

Both online and offline application options are available. 

It reduces refund-related follow-ups for investors. 

Conclusion 

ASBA is a structured way of applying for IPOs where funds are blocked rather than paid immediately. It helps create a smoother and more organised application process for both investors and banks, often initiated through a trading app linked to the investor’s bank account. By understanding how ASBA works, its eligibility rules, and application steps, investors can approach IPO participation with more clarity. While ASBA does not assure allotment, it does offer a simplified and regulated method that aligns with modern banking and market systems.