Evolved by the Securities and Exchange Board of India (SEBI), an Application Supported by Blocked Amount (ASBA) is an IPO application process. It is an application that accommodates an authorization to block the application money in the bank account.
So, you cannot use the blocked amount for any purpose. The important part is you can continue to earn interest in the blocked amount.
For an investor, their money gets will be directly debited from your bank account only if your application is selected for allotment if you want to apply through ASBA. It is refunded to your bank if you do not get an Issue, to the extent of application money, finalization of allotment in the issue or failure of issue, or t rejection of the application.
Self Certified Syndicate Bank (SCSB) is a bank that particularly provides various facilities for applying the ASBA process medium. Although the ASBA facility is not compulsory and is used voluntarily by investors, it took off in a big way because it offers several advantages.
An advantage of ASBA is that its facility is hassle-free and does not involve any cost which means you easily can register through Netbanking without submitting any physical documentation. It could be said this process is a tension-free action because the investors need not worry about the refunds.
In case there is no allotment of shares, the money is unblocked from your account for further use. The main part is when money is blocked in your bank account, you do not lose out on interest income. You can continue to earn interest on the blocked amount.
An investor had always Kept in mind that the ASBA facility is offered only by designated banks. We could say, if the investor did not have an account with any of these specified banks, he cannot make use of the ASBA facility.
How to apply? The ASBA investor shall fill in all the mentioned details in the online application system of the bank, except the application number which shall be system generated. The SCSB shall be upload all the required details in the electronic bidding system provided by the Stock Exchange. Mean to say both online and offline way an investor can apply.
The Eligibility for ASBA: An investor should be an Indian residential investor. They must have valid a PAN number along with a Demat account and a trading account must apply through the blocking of funds in the bank account with self-certified Syndicate Banks. Have an adequate balance in your bank account.