SEBI To Consider Mandating ASBA For Stock Brokers, Says Chairperson

The board of SEBI is considering whether qualified stock brokers should be mandated to offer Application Supported by Blocked Amount, or ASBA, according to Chairperson Madhabi Puri Buch.

In response to questions at an NSE event on Tuesday, Buch stated that she will bring up the matter with the board as it is already been delayed.

According to a recent NSE report, mandating this facility could benefit investors by Rs 2,800 crore.

ASBA is a method where investors authorise their bank to block the amount needed for an investment in a new issue (like an IPO). The money remains in the investor’s account and is only deducted if the application is successful. This guarantees the withdrawal of funds only upon the allocation of the investment.

SEBI introduced the ASBA facility in the secondary markets last year. However, it is still only optional. In the meantime, the primary market has implemented the facility.