InvestorQ : What is ASBA and how is it helpful to investors?
Dia Deshpande made post

What is ASBA and how is it helpful to investors?

Answer
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NISHA Nayak answered.
2 years ago


The ASBA provides an alternate mode of payment wherein the application money remains in the account of the investor till the time the allotment is confirmed. Till the basis of allotment is finalized, the amount is only blocked and the investor continues to earn interest on these funds. Effective January 01st, 2016, SEBI has made it mandatory for all book built IPOs to only use the ASBA method for applying for shares. The ASBA only provides the company with the authorization to block the sum without debiting the amount to the bank account.
ASBA has two distinct advantages for the investors. Firstly, the investor continues to earn interest on the application money till the allotment is finalized. Secondly, there is no time lag with respect to refunds as in the case of zero allotments, your lien on blocked funds is simply released.