ASBA: Meaning, Structure, and How it works

ASBA: Meaning, Structure, and How it works

For Initial Public Offerings (IPOs) and Follow-On Public Offerings (FPOs), ASBA (Application Supported by Blocked Amount) is most commonly utilised in online share trading

Investors applying for an IPO must allow the blocking of the application amount in their bank account under this process. This implies that the investor's funds are only blocked for the IPO subscription and are not deducted from their account at the time of application. The investor can spend their money for other things until the allocation is confirmed while the blocked amount accumulates interest during the application procedure.

Non-retail investors who want to invest in IPOs must complete the ASBA process. The fact that the investor's funds are only deducted if their application is chosen for allocation is one of the major advantages of employing ASBA. The blocked payment is unblocked and reimbursed to the investor's bank account if the application is rejected or the issue is withdrawn.

Why Was ASBA Implemented?

To streamline and improve the efficiency of the IPO application process for investors, SEBI created ASBA. Before the introduction of ASBA, investors had to send cheques to the banker for the initial public offering (IPO), which took three months to complete the share allocation process. The applicant did not get any interest on the cash that was locked throughout this time. Due to widespread fraud, the prior StockInvest procedure, implemented in 1993, was stopped.

In an effort to modernize the Indian stock market and improve the effectiveness and transparency of the IPO application process, SEBI launched ASBA. Since then, it has turned into a requirement for non-retail investors who want to invest in IPOs. Due to the fact that the investor's money is not locked up throughout the application process and is only deducted if the application is chosen for allocation, the ASBA procedure has made investment in IPOs more convenient and investor-friendly. Overall, ASBA has significantly improved the environment of Indian financial markets.

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Table of Content

  1. Why Was ASBA Implemented?
  2. The Process for Applying to ASBA
  3. ASBA Eligibility Requirements
  4. Advantages of ASBA
  5. How does ASBA work?
  6. Conclusion 

The Process for Applying to ASBA

Investors have the option of applying offline or online to use the ASBA service. Investors can use the offline approach by downloading the ASBA form from the BSE or NSE websites and submitting it together with the required information, including their name, PAN card information, Demat account number, bid quantity, bid price, bank account number, and IFSC, to the Self-certified Syndicate Bank. After submission, the bank will post the information to the bidding site and block the money in the investor's account.

The online approach allows investors to fill out the required information, including name, PAN, bid amount, bid price, and 16-digit unique DP number, by logging into their net banking portal, selecting the IPO Application option, and selecting that choice. Following submission, the bank will block the investor's account's balance and publish the information to the bidding site.

Investors must make sure the data they include on the ASBA form is accurate to prevent their application from being denied. They should also be aware that the money in their account will be stopped after the IPO application is submitted, making it impossible for them to use it for other purposes. 

Investors may submit up to three bids under ASBA using a single PAN. Rejecting the IPO application may be caused by several applications using the same PAN, a lack of cash in the account, or erroneous application information. Following submission, investors can monitor the progress of their application on the BSE or NSE websites.

ASBA Eligibility Requirements

Investors must fulfil specific requirements in order to qualify for the ASBA facility. These are the requirements for ASBA eligibility:

  • Investors are required to have a Demat account and a valid PAN card in addition to meeting the residence criterion of being domiciled in India.
  • Investors must utilise a Self-certified Syndicate Bank (SCSB) that satisfies SEBI's requirements in order to apply.
  • The investor should have enough cash in hand to cover the bid amount in their bank account.
  • The investor should submit a single offer at the cut-off price for the specified number of shares.
  • Any of the restricted categories should not be used by the investor.
  • The investor must concur with the requirements of not making changes to a bid after it has been placed.

Advantages of ASBA

The most effective way to submit applications for IPOs and other things is thought to be ASBA. Due to its many advantages, SEBI has mandated that only non-retail investors may apply for an IPO through ASBA as of 2016. However, a large percentage of retail investors use ASBA for fundraising. It is a result of the following advantages of ASBA:

Money from Interest

The money that you set aside in your bank account for an IPO is still earning interest while it is blocked. This implies that, unlike if you had invested using cheques or demand draughts, you do not miss out on interest income.

Uncomplicated Procedure

As opposed to using demand drafts and checks for payment, ASBA accepts electronic funds transfers. The procedure is hassle-free and economical because it may be completed totally online and using Netbanking.

No Hassles with Refunds 

If you are not given the shares, the funds are unblocked from your bank account and can be used again. Refund complications are avoided, and your money is available for other investment alternatives.

Calculation of AQB

The average quarterly balance (AQB) is calculated while taking into consideration the blocked amount in your account. This aids in maintaining your AQB and helps you avoid paying any fines for failing to keep the required balance.

How does ASBA work?

In order to complete the ASBA process, the investor's bank account will temporarily retain the application funds until the basis of allotment in the issue is determined.  As a result, the investor's money is not frozen throughout the application procedure, and they can keep earning interest on the amount that has been banned.

Self Certified Syndicate Banks (SCSBs), which are banks that meet the requirements set out by SEBI, are banks that investors can use to apply for IPOs through the ASBA procedure. SCSBs receive and validate the applications, store the cash for the bid payment amount in a pending account, and input the data into the NSE's online bidding platform. The blocked amount is unblocked and the money for the allocated shares is transferred to the issuer after the allotment basis is established.

Investors now have a more streamlined and transparent manner to submit IPO applications thanks to the ASBA procedure. Physical checks are no longer required, and the investor experiences a smooth procedure as a result. Additionally, it guarantees that during the interim period, the issuer won't get interest revenue on the float.


The full form of ASBA is Application Supported by Blocked Amount. The ASBA application procedure, which is funded by blocked funds, spares investors from submitting physical paperwork or missing out on interest payments. Investors may apply to IPOs, FPOs, and other offerings without having to pay any fees or commissions by using the quick, easy, and secure ASBA process. 

To use the ASBA function introduced by SEBI, an investor must open a Demat and trading account and link it with the bank account. For information on creating a Demat and trading account, go to the website of blinkX or download the blinkX Trading App.


ASBA meaning can be stated as applying to Initial Public Offerings (IPOs) and Follow-on Public Offerings (FPOs). 

As long as the IPO issue is still out for bids, it is unquestionably conceivable for someone to withdraw their ASBA application.

Using ASBA, you may submit applications for several IPOs and FPOs. For each offering, however, a separate application has to be submitted.

Not every bank provides ASBA. It is advised to contact your bank to find out if they provide ASBA services. In the event that your present bank does not provide this option, you might need to create an account with a bank that offers ASBA.

No, investors do not receive a preferred benefit from the ASBA procedure when shares are allocated. Although it is the safest method, there is no difference in your chances if you apply in another way.