ASBA applications to be processed only after blocking of money in investor’s bank accounts

Capital markets regulator Sebi on Monday said ASBA (Application Supported by Blocked Amount) applications in public issues will be processed only after the application money is blocked in the investor’s bank accounts. The new guidelines will be applicable for public issues opening on or after September 1, 2022, the Securities and Exchange Board of India (Sebi) said in a circular.

“Stock exchanges shall accept the ASBA applications in their electronic book building platform only with a mandatory confirmation on the application monies blocked,” the regulator said.

This will be applicable for all categories of investors — retail, qualified institutional buyers, non-institutional investors and other reserved categories and also for all modes through which the applications are processed.

In December 2009, Sebi prescribed the facility of ASBA in public issues for all categories of investors except Qualified Institutional Buyers (QIBs) and in May 2010, the regulator extended the facility to QIBs.

ASBA is an application by an investor containing an authorization to Self Certified Syndicate Bank (SCSB) to block the application money in the bank account, for subscribing to an issue. If an investor is applying through ASBA, his application money will be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalized.

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