The market watchdog SEBI today extended the ASBA (application supported blocked amount) facility to corporate investors and high Investment networth individuals (HNIs) to enable them to apply for IPOs or rights issue by keeping the application money in their bank accounts till allotment.
Currently, this facility is available only to retail investors.
“…it has been decided to expand the reach of ASBA to other investor categories also like high networth individuals, corporate investors,” the regulator said in a release.
However, qualified institutional buyers (QIBs) will not be eligible to apply for public or rights issues using the ASBA facility. “The restrictions placed on investors under ASBA Phase-I viz that only retail investors can apply and that too only at cut-off, that there shall be not more than one bid, that bids cannot be revised etc will no longer be there under ASBA Phase II,” SEBI said.
This new facility would apply to all the issues opening from January 1.
Welcoming the move, SMC Capitals Equity head Jagannadham Thunuguntla said, “it will help HNIs and corporates not to lose interest on their IPO application money during the period between the IPO completion date and listing.”
SEBI further said that since the introduction of the ASBA in 2008, it has been implemented in more than 20 issues and has benefited the investors, issuers and the market.
According to the existing norms, the amount is blocked for a 15-day period from the time of an investor applying for an IPO to the allotment date.
The SEBI said that all intermediaries, the Bombay Stock Exchange, the National Stock Exchange, registrars and self- certified syndicate banks (SCSBs) have already been advised to undertake the necessary modifications in their system and certify to SEBI about their readiness by December 25.
The SCSBs are banks recognised specially for providing ASBA services to investors. Names of such banks would be available on SEBI website.
“It is also informed that after January 1, 2010 electronic interface provided by the BSE and NSE will not be able to accept any application from the SCSBs who have failed to modify the system for ASBA Phase II,” SEBI said.
The ASBA was first used in the public issue of 20 Microns September last year, where around 10 per cent of the retail applicants used this facility. Last year, ASBA facility was also used in the rights issue of Tata Motors.
