ASBA, or Application Supported by Blocked Amount, refers to the process of withholding a certain amount from your account until publicly issued securities are released. Its purpose is to ensure transparency and efficiency while making it easier for investors to participate.
ASBA allows investors to apply for shares in an IPO or rights issue without making the full payment in advance. Instead, you give permission to your bank to hold the required amount in your account until the shares are allotted but you will get the interest from the blocked amount too.
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Benefits of ASBA
- It eliminates the risks of refunds and delays associated with traditional payment methods like cheque.
- It prevents the misuse of investor funds since the money remains in their bank accounts until the shares are allotted.
- ASBA prevents the IPO issuer from using the funds before allotting the shares.
- ASBA lets you see the status of your application easily, so you know exactly how much money is blocked for the offering.
- With ASBA, money in your account is blocked, but you continue earning interest.
- It has made the refund process transparent.
Security and Allotment Process
The blocked amount serves as security for the issuer, ensuring that the investor has the necessary funds to fulfill their commitment if the shares are allotted. Once the allotment is completed, only the amount required to purchase the allotted shares is debited from the investor’s account, and the remaining blocked amount is released.
Convenient and Paperless Process
ASBA reduces paperwork and administrative burden for investors. They are not required to submit physical application forms or payment instruments. The process is mostly electronic and can be completed through internet banking, mobile banking, or directly at the bank’s branches.
ASBA simplifies the application and payment process for IPOs and rights issues. It offers convenience, security, and efficiency to investors. ASBA has gained widespread adoption in many securities markets, contributing to investor confidence and increased participation in primary market offerings.
C-ASBA System for Organized and Efficient Applications
The C-ASBA system, developed by CDS & Clearing, aims to make the ASBA system more organized, accessible, and efficient. C-ASBA is easier and faster way of applying for newly issued shares (IPO/FPO/Mutual Fund). The implementation of C-ASBA begin from Falgun 11, 2074 in Nepal.
C-ASBS stands for Centralised-Application Supported by Blocked Amount. C-ASBA is integrated within Meroshare.
How C-ASBA Works?
C-ASBA establishes a centralized system by linking all banks, financial institutions, and the beneficiary account (demat account) involved in ASBA-related services.
This integration allows for the verification of investors’ bank account details before their applications are entered.
Obtaining CRN Number for Share Purchase
Banks and financial institutions provide each investor with a CRN (C-ASBA Registration Number) after verifying their beneficiary account. Only investors with a CRN number are eligible to apply for purchasing shares from their bank accounts.
Investors without internet access can also apply by visiting the bank, presenting their CRN number, and filling out a physical form.
Applying for Shares:
Investors can apply for shares using the C-ASBA system through two options: internet-based application and physical form submission. Internet-based application requires access to the internet and the investor’s CRN number. Alternatively, investors without internet access can visit the bank, provide their CRN number, and fill out a physical form.
Advantages of Using C-ASBA System
Verified Applicant Details:
The C-ASBA system ensures that the details provided by individuals who want to buy shares are already verified. This eliminates the need for the issue manager to go through the verification process again.
The C-ASBA system simplifies and removes unnecessary steps in the share allotment and distribution process. This leads to faster processing and reduces the waiting time for investors.
Using C-ASBA doesn’t need a lot of paperwork so that It saves money for the people and the issue manager.
Improved Investor Experience:
The C-ASBA system enhances the overall experience for investors. The faster processing and reduced waiting period enable them to participate in the share purchase process more smoothly and conveniently.
Through its centralized nature, the C-ASBA system promotes transparency in the share issuance process. Investors can have confidence in the fairness and integrity of the allocation, knowing that verified details are being used.
Accessibility for All Investors:
The C-ASBA system offers accessibility to a wide range of investors. Whether they have internet access or not, they can apply for shares through online applications or physical forms. This ensures equal opportunities for all investors to participate.
The C-ASBA system maintains systematic records of applicant details and share allotment. This organized record-keeping allows for accurate tracking and facilitates future reference and auditing purposes.
How to get C-ASBA registration number?
To obtain the C-ASBA registration number (CRN), follow these steps:
- Visit an approved bank / DP that offers ASBA facility.
- If you don’t have a bank account, you will need to open one.
- Fill out the C-ASBA form provided by the bank once you have a bank account and Demat.
- To complete the C-ASBA form, you need the demat account details.
- The bank will check your demat account after you complete the form and give you the CRN number.