ASBA
ASBA (Application Supported by Blocked Amount) is a method where the application money for an IPO is blocked in your bank account instead of being paid upfront.
ASBA is a facility used while applying for IPOs, where the required amount is blocked in your bank account but not deducted immediately.
When you apply for an IPO using ASBA:
The bank blocks the amount in your account
The money stays in your account but cannot be used
If shares are allotted, the amount is deducted
If shares are not allotted, the blocked amount is released
This method is safer and more convenient because:
You continue to earn interest on the blocked amount
There is no need for refunds if you don’t get shares
The process is more transparent and secure
ASBA is mandatory for most IPO applications in India and is available through banks and trading platforms.
Example:
Suppose you apply for an IPO worth ₹50,000 using ASBA. Your bank will block ₹50,000 in your account. If you get shares worth ₹20,000, only that amount will be deducted, and the remaining ₹30,000 will be unblocked.