Taking the initiative to speed-up the initial public offer (IPO) process forward, the Securities Exchange Board of India (Sebi) board approved the concept of providing an alternative mode of payment in issues whereby the application money remains in the investors’ account till finalisation of basis of allotment in the issue.
Sebi has now elucidated the details under the Applications Supported by Blocked Amount (ASBA) process and has invited comments and suggestions on these by before June 6, 2008.
Essentially, the ASBA process would be available for retail individual investors only for those bidding at the IPO cut-off price with only a single option. They will be able to do this through Self Certified Syndicate Banks (SCSBs), in which the investors have bank accounts.
SCSBs are those banks, which satisfy the conditions laid down by Sebi in the paper. Investors would also be able to use banking facilities.
The SCSBs would accept the applications, block the fund to the extent of bid payment amount, upload the details in the electronic bidding system of BSE or NSE, unblock once basis of allotment is finalised and transfer the amount for allotted shares, to the issuer.
Sebi intends to position this process an additional mode of making payment in issues, by retail individual investors who have bid at cut-off with single option.
This would co-exist with the current procedure of investors applying through sub syndicate/ syndicate members with cheque as a payment instrument.