What Is Application Supported By Blocked Amounts (ASBA)?

Buy Gold Mutual Funds

Invest Mutual Funds Online

Download Tax Saving Mutual Fund Application Forms

Call 0 94 8300 8300 (India)

It is a facility provided by banks to investors in initial public offerings (IPOs), follow-on public offers (FPOs) and new fund offers (NFOs) of mutual funds. If you apply for an IPO/NFO via Asba, your application amount gets blocked in your bank account. While the amount stays in your account, it cannot be used until the share/MF unit allotment is done. The money is debited from the bank account only if your application is selected for allotment after the basis of allotment is finalised, or the issue is withdrawn or fails. The amount debited depends on the shares/MF units allotted to you. And, the remaining amount, if any, is freed for use. The option, though available, is not mandatory for retail investors. They can continue to make applications through the existing facility of applying with cheque.

WHILE IT IS NECESSARY FOR YOU TO HOLD AN ACCOUNT WITH THE BANK TO OPT FOR THIS FACILITY, it is not necessary for you to hold the demat account with the same bank. You can avail the option either online via net-banking or by submitting it to the bank

What is the procedure?

Under the Asba facility, investors can apply in any public/rights issue by using their bank account. Investors must submit the Asba form (its colour is different from the normal application form and is available at the designated branches of the banks approved for providing the facility) after filling details such as name of the applicant, permanent account number (PAN) number, demat account number, bid quantity, bid price and other relevant details, to their banking branch with an instruction to block the amount in their account. In turn, the bank uploads the details of the application in the bidding platform. Investors must ensure that the details that are filled in the Asba form are correct, otherwise the form is liable to be rejected. While it is necessary for you to hold an account with the bank to opt for this facility, it is not necessary for you to hold the demat account with the same bank. You can avail the option either online through net-banking or by submitting it to the bank.

 

Why use the facility?

Prior to Asba, while applying in an IPO, the entire amount had to be paid upfront, even before an allotment by retail investors. In case there was no allotment or part-allotment, the amount would get refunded to the applicant after 20-30 days. This was alost opportunity as the funds did not earn any interest during the period either. However, if the application is made via Asba, the funds stay blocked in your account, but continue to earn the interest. It is especially important after the shift to interest calculation on the daily balance.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

 

---------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

Best Performing Mutual Funds

1. Largecap Funds Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Birla Sun Life Front Line Equity Fund
2. Large and Midcap Funds Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
2. Mid and SmallCap Funds Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
3. Small and MicroCap Funds Invest Online

1. DSP BlackRock MicroCap Fund
4. Sector Funds Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
5. Tax Saver Mutual  Funds  Invest Online
1. ICICI Prudential Tax Plan
2. HDFC Taxsaver
3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund
6. Gold Mutual Funds Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund