Before 2008, applying for an IPO in India was a messy business. You had to send a physical cheque for the full amount, your money would leave your bank account for months, and if you didn't get any shares, you had to wait even longer for a refund. Sometimes, those refund cheques got lost in the mail!

To solve this, SEBI (the stock market regulator) introduced ASBA, which stands for Application Supported by Blocked Amount.

In simple terms, ASBA is like a reservation for your money. When you apply for an IPO, your bank doesn't send the money to the company. Instead, it just puts a lock on that amount in your own savings account. The money stays with you, you continue to earn interest on it, and it only leaves your account if you are actually lucky enough to get shares. In 2026, ASBA is not just an option, it is mandatory for every investor in the Indian market.

How does ASBA work? (The Simple Cycle)

The beauty of ASBA is that it happens entirely between you, your bank, and the stock exchange.

Instruction: When you fill out your IPO application (via UPI or Net Banking), you give your bank a Mandate to block a specific amount (e.g., ₹15,000).
The Block: Your bank marks this amount as Reserved. You will see it in your balance, but you cannot spend it or withdraw it.
Interest: Because the money is still technically in your account, your bank keeps paying you your regular Savings Account Interest on that blocked amount.
The Decision:
- If you get shares: The bank unlocks the money and sends it to the company.
- If you don't get shares: The bank simply removes the lock. The money is instantly available for you to use again. No waiting for refunds!

Why is ASBA better for you?

Feature

Old System (Cheque)

New System (ASBA)

Money Location

Sent to the Company

Stays in Your Bank

Interest

Company earns it

You earn it

Refund Process

Slow (15–30 days)

Instant (No refund needed)

Safety

High risk of lost cheques

Extremely Secure (SEBI Regulated)

Paperwork

Massive

Digital & Paperless

Frequently Asked Questions (FAQs)

Is ASBA free to use?

Yes. Most banks (called SCSBs Self-Certified Syndicate Banks) provide the ASBA facility for free to their customers.

Can I use ASBA for a 2 Lakh+ application?

Yes. For applications above ₹2 Lakhs (HNI category), ASBA via Net Banking is the preferred and most reliable method.

Does ASBA work with UPI?

Yes! When you apply via a UPI app (like GPay), the UPI Mandate you approve is actually a form of ASBA. It blocks the money in your account.

What if I have a low balance and a check clears?

If your balance falls below the Blocked amount because a cheque cleared, your IPO application will be rejected for insufficient funds.

Can I cancel an ASBA application?

Yes, you can withdraw your bid anytime before the IPO closes. Once you withdraw, the bank typically unblocks the money within a few hours.

Can I use a Current Account for ASBA?

Yes, ASBA can be used with both Savings and Current accounts, as long as the bank is an SCSB.

Why is my money still blocked even after I didn't get allotment?

Sometimes the bank takes 1-2 extra days to receive the Unblock instruction from the registrar. Don't worry; it is a standard technical process.

Is ASBA available for SME IPOs?

Yes. ASBA is mandatory for all types of public issues, including Mainboard IPOs, SME IPOs, and Rights Issues.

Can I use someone else's bank account for my ASBA?

No. The PAN on the IPO application must match the PAN on the Bank account. If they don't match, the application will be rejected.

What is an SCSB?

It stands for Self-Certified Syndicate Bank. These are banks recognized by SEBI that have the technology to block and unblock funds for IPOs.

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