What is ASBA?
Unlike traditional methods, where funds are deducted immediately upon application, ASBA allows investors to apply for securities without transferring funds upfront. Instead, the application amount is blocked in the investor's bank account, ensuring the funds remain available until allotment.
This process minimises the risk of refunds and ensures greater transparency in the allocation of securities. Investors continue to earn interest on the blocked amount until it is debited upon successful allotment. ASBA is mandatory for IPO applications and is widely used for public issues, rights issues, and other market offerings.