ASBA IPO Application Process: How to Apply and Benefits Explained

In the past, the IPO process was lengthy and complicated. Investors had to visit their broker’s office to collect and fill out IPO application forms, then submit them physically, which was time-consuming and cumbersome. This involved multiple steps and paperwork, leading to a drawn-out process. However, the introduction of the Application Supported by Blocked Amount (ASBA) system has simplified this experience. ASBA allows investors to apply for IPOs online, directly through their bank accounts, which blocks the application amount without actually debiting it until the shares are allocated. This streamlines the process, making it quicker and more convenient.

How to Apply for an IPO?

To start investing in an IPO, you need to open demat account or trading account.

After setting up your account, you can apply for IPOs online using one of two methods: the ASBA (Application Supported by Blocked Amount) facility, which is available through most banks, or by using your UPI ID.

ASBA simplifies the process by blocking the application amount without debiting it until shares are allocated, while UPI allows a straightforward application process through your bank account. Both methods streamline the IPO investment experience.

What is ASBA?

ASBA, or Application Supported by Blocked Amount, is a system developed by SEBI to simplify the IPO application process. It allows investors to block the amount required for an IPO in their bank accounts rather than transferring the money upfront. This means the blocked amount remains in the investor’s account and continues to earn interest until the shares are allotted.

If your application is selected for allotment, the money is debited from your account only at that time. If you are not allotted shares or decide to withdraw your application, the blocked amount is released back into your account. This system enhances transparency and ensures that funds are available only when necessary.

Since 2016, SEBI has mandated the use of the ASBA form for all IPO applications. For non-retail investors, applying through ASBA is compulsory, ensuring that the funds are managed efficiently and securely throughout the IPO process.

How to Apply for an IPO Using ASBA

You can apply for an IPO using ASBA both online and offline. We will discuss both the medium:

Online Method to Apply for an IPO Using ASBA

Using Net Banking

• First, log in to your bank’s net banking portal
• Once logged in, locate the ASBA or IPO application tab
• Choose the ‘Apply IPO’ option and select the IPO of the company you want to invest in
• Enter the necessary details, including your PAN number, bid price, quantity, and Demat account number
• Submit your application. Note that bids submitted before 2 PM on a business day will be processed the same day, while bids placed after 2 PM will be considered for the next business day

Through a Broker

• First, visit your broker’s website or app and log in to your Demat account
• Navigate to the IPO section and click on it. A list of available IPOs will appear; select the company you wish to bid on
• Enter the lot size and bid price
• To increase your chances of allotment, consider bidding at the cut-off price or the upper end of the price band
• Next, enter your UPI ID and click ‘Submit’
• You will need to approve the transaction through your UPI app
• The mandate notification will appear on your UPI app, and the funds will remain blocked until the IPO allotment date

Offline Method to Apply for an IPO Using ASBA

To apply for an IPO online ASBA, follow the steps discussed below:

• Visit the nearest branch of your bank or brokerage firm
• Complete the ASBA form and provide the necessary KYC details
• Once submitted, the funds will be blocked in your account. The amount will only be debited from your bank account if you are allotted shares after the allotment process Eligibility to Apply IPO Through ASBA

To apply for an IPO conveniently through ASBA, investors must meet the following eligibility criteria:

• Be an Indian citizen
• Hold a valid PAN card
• Have a Demat account and an online trading account
• Apply through a Self Certified Syndicate Bank (SCSB) where you have a bank account
• Ensure your bank account has sufficient balance to block the funds
• Place a maximum of three bids; include the quantity if bidding at the cut-off price
• Retail investors must bid for an amount equal to or less than INR 2 lakhs
• Cannot apply under the reserved category
• Cannot revise the bid after submission

Advantages of Applying IPO Through ASBA

Given below are some of the major advantages of applying through ASBA:

• Paperless Application: The ASBA process is entirely paperless. No documents, cheques, or demand drafts are required. Your bank account must be KYC- compliant, eliminating the need for additional paperwork.
• Zero Charges: ASBA services are free of charge with no hidden costs. All Self Certified Syndicate Banks provide this service at no cost, though you must activate net banking.
• No Loss of Interest: You continue to earn interest on the blocked amount. The investment is only deducted after allotment, and the blocked funds are included in the bank’s quarterly balance calculations.
• Quick Refunds: If you are not allotted shares or if you withdraw your application, the funds are promptly refunded to your bank account, ensuring quick access to your money.
• Hassle-Free Process: Applying via ASBA is straightforward. Simply log in to your bank account, choose the IPO, enter the quantity and price, and complete the application in just a few minutes.
• Safeguarding Your Money: Your funds remain inaccessible to the IPO company until shares are allocated and transferred to your demat account, ensuring your money is secure.