The Securities and Exchange Board of India (Sebi) on Monday said processing of ASBA applications for public issue of equity shares and convertible goods should start only when the bid money in the investor’s bank account is blocked.
This circular will be applicable for all categories of investors such as retail, Qualified Institutional Buyers (QIBs), non-institutional investors (NIIs) and other reserved categories and also for all the modes through which applications are processed.
“ASBA applications in public issues will be processed only after the application money is blocked in the bank accounts of the investor. Accordingly, all intermediaries/market infrastructure institutions are advised to ensure that three months from the date of issue of this circular Appropriate systemic and procedural arrangements are put in place within a month,” SEBI said in a circular on Monday.
SEBI further said that the stock exchanges are required to accept only ASBA applications in their electronic book building platform, with mandatory confirmation of blocking of application money.
All the stakeholders involved in the process have been advised to take necessary steps to ensure compliance of the circular.
The provisions of the circular will be applicable to public issues opened on or after September 1, 2022.
Application backed by ASBA or Blocked Amount means an application by an investor who has authorization to block the Application Amount in a 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 when his application is selected for allotment on the basis of allotment.
All investors in Public Issues and Rights Issues must compulsorily apply through ASBA.
In December 2021, NPCI (National Payments Corporation of India) increased the per transaction limit in UPI from from 2 lakh 5 lakh for UPI-based ASBA application in Initial Public Offer (IPO).