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What is ASBA? How to Apply? Its Benefits?ASBA is a simplified share application process. It stands for Applications Supported by Blocked Account, which is ASBA’s full form. It was rolled out by SEBI in 2008. It is a progressive system. It is being used by people who apply for new shares, like in IPOs. Its improved features, benefit the investors. It is a seamless and effortless system. What is an ASBA account? To understand ASBA, these are the key concepts:What is ASBA?ASBA’s full form is Applications Supported by Blocked Account. ASBA account is not a real account. It is an authorization to the investor’s bank to earmark application money till allotment happens. Banks licensed to do this, are called Self-Certified Syndicate Banks (SCSB). They help the investor bid for fresh shares, by this route. The following paras, give clarity about ASBA Eligibility Criteria for ASBA• Retail investors applying for share allotment by ASBA account, require the following: How to Apply for ASBA?The ASBA application process is simple. When the issue of shares opens, the investor will submit the ASBA form to the SCSB bank branch. He can submit a physically signed form. He can also do this online, by digital banking ie. ASBA online. For this, he must have transaction rights in online banking. The main details to be filled in will be the number of shares bid and bid price along with personal details like Name and Demat account details. Also, the investor authorizes the bank to block the application money for the shares bid, till allotment. Benefits of ASBAThe benefits of ASBA are of 3 kinds: Simplicity:• ASBA online is a one-time submission to the Bank. No separate application for a share issuing company is needed. Cost efficiency:• Application money does not leave the investor account Time savings:• Online submission is quick How does ASBA work?• It is mandatory for investors to subscribe to fresh share issues using ASBA accounts with effect from 1st Jan 2016. Clarity about the ASBA process for investors:•While SEBI permits certain SCSB branches to hold ASBA accounts and this list is available on the SEBI website, all branches of SCSBs can accept share applications The need for an ASBA account emerged as retail investors had crores of cash locked up in non-interest-bearing, pipeline accounts. This was also for long periods of time. This could prevent further investments in equities by investors. This problem has been solved with the introduction of the ASBA accounting system. |
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