ASBA stands for Application Supported by Blocked Amount. Introduced by SEBI in 2008, it is a secure and convenient facility that allows investors to apply for IPOs, FPOs, rights issues, and mutual fund New Fund Offers (NFOs).
In the ASBA process, the application amount is blocked in your bank account instead of being immediately debited or transferred. The funds remain blocked until allotment is finalized. If you receive an allotment, only the required amount is debited; otherwise, the blocked amount is automatically released.
This ensures your money stays in your account, continues to earn interest as per your bank’s terms, and is transferred only upon successful allotment. As per SEBI guidelines, ASBA is required for public issue applications made through banks that provide this facility.
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