Sebi makes ASBA mandatory for IPOs

capital market | Mumbai |

New system applicable for all IPOs which open on or after 1 January 2016

Stock market regulator Securities and Exchange Board of India (Sebi) today, 23 June 2015, announced streamlining the initial public offer (IPO) process, obviating the need to issue cheques. Considering the reach and advantages of the ASBA (Applications Supported by Blocked Amount) facility, it shall now be mandatory for all investors to use the ASBA facility for applying to an IPO, Sebi said in a press release. The new system will be applicable for all IPOs which open on or after 1 January 2016. In order to substantially enhance the points for submission of applications through ASBA facility, Registrar and Share Transfer Agents (RTAs) and Depository Participants (DPs) will also be allowed to accept application forms (both physical as well as online) and make bids on the stock exchange platform. This is in addition to stock brokers and banks where such facilities are presently available.

When an investor applies for an IPO using the ASBA facility, the amount is blocked in his/her bank account for the IPO application. The amount is debited from the investor's bank account only when the shares are allotted to the investor.

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