ASBA stands for Applications Supported by Blocked Amount, which is an alternative payment method to apply for an IPO. Let's go through some more details on it.
In the ASBA method, the bidding for an IPO gets blocked by the bank until the allotment is done but the amount remains in the investor's account itself. Here in this article, we are going to know about the ASBA Payment method for IPO along with its various benefits and uses. So, without any further delay, let us get it started.
ASBA Payment method is an alternative payment method, which is available for retail individual investors. By using this payment method investors can apply for various IPOs or bid for the same.
Usually, in other forms of payment, the amount for the application or bid gets debited and then the application of the investor is placed. However, under the ASBA payment method, the amount is not entirely debited and only gets blocked until the successful allotment of the bid. Until the bid is allocated the amount actually stays in the investor's account itself.
ASBA Payment offers an alternative payment method to the retail individual investors, which can be beneficial especially to the investors not having any Demat account and want to bid for the IPOs.
ASBA payment method also makes it to the investors to apply for the IPOs directly through participatory banks knowns as SCSB's. The main motive here is to reduce the turnaround time for the IPO stock listing which also makes the refund process much more efficient.
So this is all about the ASBA payment method for IPO. ASBA is an excellent process that ultimately makes both the listing and refund process much faster and efficient and at the same time offers an alternative payment method to the investors.