IPO Application Methods - Apply IPO through ASBA

Introduction

The process of applying for IPOs has undergone a massive change. Earlier, investors had to visit the broker's office to collect the IPO application form. They wasted many minutes or even hours filing the application form manually. Moreover, they had to write a cheque and submit other documents with the application. And, inadvertent clerical mistakes could not be ruled out. 

Fast forward to today, and you can experience a super-fast IPO application process, thanks to ASBA or Application Supported by Blocked Amount. Previously, only Qualified Institutional Buyers could apply through ASBA. But presently, all investors can apply for IPOs through ASBA. 

What is ASBA?

ASBA or Application Supported by Blocked Amount is a mechanism developed by the Securities & Exchange Board of India (SEBI) to simplify investing in IPOs. Through this system, the investor authorises a Self Certified Syndicate Bank (SCSB) to block (mark lien) the amount the investor has used to apply for the IPO. The application money gets debited from the investor's account only if there is an allotment. If the investor gets an allotment, the money is deducted from the bank account, and the shares are credited to their Demat account. But, if the investor hasn't got the allotment, the lien is removed from the account, and the investor can access the funds.

What is the meaning of Self Certified Syndicate Bank (SCSB)?

A Self Certified Syndicate Bank (SCSB) is a scheduled commercial bank that provides and facilitates ASBA-based IPO applications. You can check the list of participating banks on SEBI website.

How can you apply for an IPO through ASBA?

You can apply for an IPO through ASBA in two ways - online and offline.

Here is the process to apply online:

1. Open the bank website and log in with your ID and password
2. Visit the 'Demat Services' section and click on 'New IPO.'
3. Select the IPO name from the list of open issues.
4. Enter the lot size (quantity) and price and submit your bid.
5. Approve the mandate request by the bank.
6. Your application is accepted, and the application ID is generated.

It is wise to retain the application number for your reference.

However, if you are confident about applying online, you may also invest through a bank.

Here is the process to apply for an IPO offline:

1. Visit your bank and collect the IPO application form.
2. Fill in details like investor's name, PAN number, Demat account number, lot size, bid price, and other details on the application form. Also, sign the mandate form instructing the bank to block the amount.

After you submit the IPO application form, the bank uploads your application details to the bidding platform. Ensure that the information you have entered in the IPO application form is 100% correct, else your application will be summarily rejected.

What is the eligibility criteria for ASBA?

To place your bids through ASBA conveniently, you must fulfil the following eligibility criteria:

1. You must be an Indian citizen.
2. You must have a PAN card number.
3. You must have a Demat account and an online trading account.
4. You must apply through a Self Certified Syndicate Bank with which you maintain an account.
5. Your bank account must have enough clear balance to facilitate the blocking of funds.
6. You can place a maximum of three bids. However, you can only fill the quantity if you bid at the cut-off price. It is wise to note that retail investors can only bid for an amount that is equal to or less than INR 2 lakh.
7. You cannot bid under the reserved category.
8. You understand that you cannot revise a bid once placed.

What are the benefits of applying for an IPO through ASBA?

1. No-Frills Process - Perhaps nothing can be more convenient than applying for an IPO through ASBA. All you need to do is log in to your bank account, select the issue name, enter the quantity and price and invest. 
2. No Loss of Interest - You continue earning interest on the blocked amount since the investment amount is not deducted before the allotment date.
3. No Need to Deposit a Cheque or Multiple Documents - As the amount is blocked in your bank account and gets deducted after allotment, you do not need to deposit any cheque or demand draft. Also, if your bank account is KYC-compliant, you do not need to submit any additional documents along with your IPO application.
4. Free Service - All Self Certified Syndicate Banks offer free ASBA services to investors. You need to activate the net banking feature, though.
5. Easy Refunds - If you cannot manage an allotment, the amount will be instantly released, and you can get it as a clear balance.

5paisa makes IPO investing

While ASBA is certainly one of the best ways to apply for an IPO, you can take the convenience one step further. Visit 5paisa's official website to experience a one-click IPO application. 5paisa offers a UPI-based IPO application to help you apply conveniently without requiring a net banking account. Click here to know how to check IPO Alltoment Status