How to apply for IPO using ASBA?

How to apply for IPO using ASBA?

How to apply for IPO using ASBA?

SEBI has made it compulsory for retail investors to apply for IPO using ASBA (Applications Supported by Blocked Amount) only. ASBA was launched on May 1, 2010 and is a facility wherein the amount remains blocked in the savings bank account of the applicant until the shares in IPO is allocated to him. In case the shares are not allocated, the amount is unblocked immediately and open for use.

ASBA – Advantages

The advantage of ASBA is there is no delay in refund of application amount in case no shares or fewer shares are allocated to investor in IPO. Also the amount is only debited (to that extent) from the account when a confirmed allotment happens.

For example, in case of the present IPO Precision Camshaft, you want to apply for 800 shares at cutoff price (Rs 186). When you do so the bank will block Rs 1,48,800 (Rs 800 X 186) in your savings account. You can see the money in your account but cannot use it. Once the allotment happens, the money would be debited from your account. In case there was over-subscription and you were allotted only 80 shares at cut-off price, only Rs 14,880 would be debited. Rest amount would be unlocked and free for use. In case there is no allotment, all amount would be free.

As you can see the advantage of ASBA are instant refund and also the money lying in savings account keep on earning interest.

Also Read: Why Investing in Mutual Fund NFOs is Bad Idea? 

ASBA Problem

The problem is ASBA is still not popular among retail investors. In last three IPOs more than 75% of applications can from non-ASBA route. Making it compulsory might leave some investors. Also not all banks offer online ASBA facility which is another major issue.

How to apply IPO through ASBA online?

Banks like Axis, SBI, IDBI Bank, Bank of Baroda etc offer online facility to apply for IPO through ASBA. All you need to do is login to your internet banking and search for ASBA.

Below is the screenshot for SBI ASBA facility.

ASBA option for IPO Investment in SBI

ASBA option for IPO Investment in SBI

Also Read: 25 Tax Free Incomes & Investments in India

SBI ASBA Form for IPO

SBI ASBA Form for IPO

The form is simple you just need to give your PAN number, Demat account number and IPO bidding details.

After this you would be promoted for high security password sent on your registered mobile. Once you enter that correctly you get the acknowledgement page with the details.

SBI ASBA Confirmation Page

SBI ASBA Confirmation Page

What if your Bank does not offer ASBA Online?

In case your bank does not offer online ASBA facility, you need to fill up an online form, take a print out and deposit in relevant branch of your bank. Following are the steps:

Also Read: Where to Park Money for less than 6 Months?

Step 1: Go to ASBA e-Forms on NSE

Step 2: Select the IPO you want to apply

Step 3: Click on Bid-cum Application Form Download

Step 4: Fill up the online form

Step 5: Download the form

Step 6: Submit the form to designated branch along with PAN card photocopy

ASBA eForm for IPO Investment

ASBA eForm for IPO Investment

ASBA – Important Points:

  • Retail investors are those who apply for less than Rs 2 lakhs in IPO
  • The banks which provide ASBA facility are called Self Certified Syndicate Bank (SCSB)
  • Five applications can be made from a bank account per issue
  • The application through ASBA can be cancelled before closure of IPO bids. To cancel the application after the closure of IPO, you need to send cancellation request to Registrars who would instruct the bank to unblock the amount.

To conclude:

With ASBA being compulsory, retail investors would be forced to use it. Ideally with so many advantages, SEBI should have tried to make it popular rather than compulsory.

25 thoughts on “How to apply for IPO using ASBA?

  1. i am not get allotment but my amount still locked what should i do

  2. Hi thank you for details.

    I am using kotak bank asba to link with sharekhan,
    After submitting or before submitting schould i visist sharekhan office and fill/submit any forms manually

  3. Hi I have a online bank account and my brother has a demat. But his bank is not having ASBA as well as online banking. Can I apply a lot each in IPO for my demat as well as his demat account? Secondly if he is allotted the shares and sells them who is liable to pay the capital gains tax?

    • There is option to create multiple profile in a bank account for ASBA. So you can use your bank account to apply for your brother & your’s share in IPO.

      All taxes would be liability of person allocated the share.

  4. Hi Amit, how to sell iPo shares which are applied through online sbi?

  5. Rishika Ahluwalia says:

    ASBA – A good channel to make investments in IPO. great article.

  6. Ashish Vaidya says:

    ASBA- If at the time of procedure of from i have insufficient balance in my account then what haapand ? form reject ?

    • You would not be able to do ASBA if there is not sufficient balance in your account. Once ASBA is done the relevant amount is locked and cannot be withdrawn until you cancel ASBA or do not get any allotment.

  7. Hi Amit,

    I haven’t tried to cancel application on last day after 2:30 PM.

    I need to know in case a “IPO on last is not heavily oversubscribe” and I have to cancel the bid/application in SBI Saving Account ASBA screen.

    Can I cancel a IPO application in SBI SAVING ACCOUNT ASBA facility after 2:30 PM on IPO closure day ?

    Thanks
    SAC

    • You can cancel the IPO application applied through ASBA. As per me cancelling should be allowed before 2:30. But suggest you to confirm the same with SBI customer care as the cutoff timing for ASBA application/withdrawal would be different for different banks.

  8. at nse website filling detail as new user,error comming as invalid key.where all account detail is two times checked ok

  9. My mother has demat account in zerodha . So during IPO can I fill ASBA details from my bank account and put her Demat account number for reciving the shares.

  10. I have used it extensively. ASBA is a good channel to bid for an IPO.

  11. What are the charges for ASBA ??
    I have a savings account in SBI and want to know the same

  12. ASBA is really useful specially with online bank account as you don’t need to transfer funds to any of the stovk brokers. This artivle is really useful.

  13. My demat account can’t be mapped why??

  14. Hi Amit,

    I applied for the IPO on the 1st day of the window and Cancelled the Application on the 2nd day of the IPO window. What is the procedure to get the refund from the Bank.

    Thanks
    Ram

    • The amount never leaves your saving account until you are allotted shares in IPO. The amount is just locked. So when you cancel your application in the eligible period, the amount should ideally get unlocked in a day or two.

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