A common question in the mind of new investors is What is ASBA and why is it essential?

1. ASBA or Application Supported by Blocked Amount is a process used to ensure that investors can apply to an ongoing IPO or rights issue with ease.
2. The process introduced by the Securities & Exchange Board of India in 2008 allows investors to instruct their banks to block the application amount for an IPO in their bank accounts.
3. The amount is debited from the bank account only if the investor is allotted shares. Otherwise, the funds are unblocked.
4. Once you are clear about the meaning of ASBA, you can find out more about its benefits and its working
5. The investor need not have to bother about refunds as money to the extent required for allotment of securities, is deducted from the bank account and in case the securities are not allotted to the investor, then the blocked amount in his/ her bank account is released and made available to use.

WHY THE ASBA IS ESSENTIAL WILL BE DISCUSSED IN NEXT ARTICLE....