Making an IPO application using your net banking falls under the ASBA (Application Supported by Blocked Amount).
ASBA is a mechanism introduced by the Securities and Exchange Board of India (SEBI) to simplify the IPO application process and protect investors’ interests.
In traditional IPO, when investors apply for shares, they need to pay the entire application amount upfront, and their funds are blocked until the IPO allotment process is completed.
If the IPO shares are not allotted to them, the blocked amount after 10-15 days was then refunded. Which was painful for the unsuccessful IPO investors. You didn’t get shares and also lost interest money.
With the ASBA process, your funds remain in your bank account during the IPO application. An amount equivalent to the IPO application is temporarily blocked or reserved in the bank account. The blocked amount remains inaccessible for any other use until the IPO allotment is finalized.
Apply for IPO Through Net Banking (ASBA): Requirements
For applying through net banking (ASBA) you need to have
- Bank account with net banking facility
- Have a demat account cum trading account
- Your bank account must have enough balance to facilitate the blocking of funds.
- You can place a maximum of three bids, but you have to fill in the quantity if you bid at the cut-off price.
- You can apply under retail (RIIs) or high net-worth (NIIs) category
Advantages of ASBA in an IPO
#1. No Fees Involved
ASBA or applying through net banking is provided free of charge by your bank, with no hidden costs. All Self Certified Syndicate Banks offer ASBA services to investors without any fees. The only prerequisite is the activation of the net banking feature.
#2. No Interest Loss
Your funds are not debited until allotment, and you continue to earn interest on the blocked amount lying into your savings account.
#3. Effortless IPO Application
Applying for an IPO through ASBA is a hassle-free process and can be completed from your home, office or any other place.
You simply need to log in to your bank account, choose the desired IPO, input the quantity and price, and complete your investment within a few minutes.
#4. Quick Refund
If the IPO shares are not allotted, the blocked amount is quickly released, and you can use it immediately if you wish.
#5. Simplified Process
The ASBA process eliminates the need for a separate refund process, making the IPO application procedure smoother and more efficient.
#6. Investor Protection
ASBA ensures that the blocked amount is not misused or withdrawn for other purposes, providing greater security for investors.
#7. Paperless Convenience
The application process is entirely paperless, eliminating the need for couriers, for filling, application submissions, cheques, or demand drafts.
How to Apply IPO Through Net Banking
Applying for an IPO through net banking is a convenient and straightforward process. Here’s a step-by-step guide on how to apply.
#1. Check IPO Details
First, gather all the necessary information about the IPO you want to apply for, including the company’s name, IPO price, lot size, and the number of shares you wish to apply for.
#2. Login to Net Banking
Access your bank’s net banking portal using your login credentials.
Below I have shown for Kotak Bank, but the process will be more or less the same for all the banks.
If you have HDFC bank account, then you can check the step-by-step process to apply IPO through HDFC net banking.
#3. Access IPO Section
Once logged in, navigate to the ‘Investment’ or ‘Online Investments’ section of your net banking portal.
Different banks might have slightly different layouts, so look for options related to IPO applications or investments.
#4. Select the IPO
From the list of available IPOs, choose the one you want to apply for.
#5. Fill in the IPO Application Form
Enter the necessary information like bid quantity and price. Make sure to double-check all the details before proceeding.
#6. Confirm and Submit
Review the application form once again and click on the “Submit” or “Confirm” button to complete the application process.
Note – If you are applying for IPO for the first time, then you need to do a one-time registration in your net banking.
You will need your demat account number for registration. Below is the video showing how to do one-time registration and apply for an IPO.
Which Banks in India Offer ASBA
Almost all scheduled commercial banks in India offer the ASBA (Application Supported by Blocked Amount) facility for IPO applications.
Here are some of the major banks in India that typically offer the ASBA facility:
- State Bank of India (SBI)
- HDFC Bank
- ICICI Bank
- Kotak Mahindra Bank
- Bank of Baroda
- Canara Bank
What Happens to Money at Various ASBA Stages
Here’s what happens to the money lying in your bank account at each stage:
#1. Application Stage
When you apply for an IPO using ASBA, the required amount is blocked in your bank account. It means that the money is not deducted from your account but is temporarily set aside or reserved for the IPO application.
Blocking ensures that the funds are available for allotment if your application is successful.
#2. IPO Allotment Stage
After the IPO subscription period ends, and the allotment process is completed, shares are allotted to successful applicants. If your application is successful, the necessary funds for the allocated shares are debited from your bank account, and the shares are credited to your demat account.
#3. Refund Stage
If your IPO application is not successful or if you are partially allotted shares, the blocked amount is released back to your bank account. This refund typically happens within a few days after the IPO allotment process is completed. The unblocked funds are then available for your regular use.
#4. Unused Amount
In some cases, you might apply for more shares than are allotted to you. In such situations, the excess amount that was blocked but not utilized for share allotment is also released back to your bank account as part of the refund.
What to do After Applying IPO Through Net Banking
After you have used net banking to apply for an IPO, there are a few important steps you should take:
Ensure that you have received a confirmation of your IPO application. You will also receive an IPO application (bid) number.
Once you submit the application through net banking, you should receive a confirmation message or email from your bank acknowledging your IPO application.
#2. Check Application Status
After the IPO subscription period ends, you can check the status of your IPO application. You can do this by logging into your net banking account and navigating to the IPO section.
IPO application status can be found on the website of the registrars to IPO and stock exchanges.
#3. Allotment Status
Wait for the IPO allotment process to be completed. After the IPO closes for subscription and the shares are allotted to applicants, you can check whether you have been allotted any shares.
Allotment information is usually available on the website of the registrar or the stock exchange where the IPO is listed. You can also check the allotment status on the website of the IPO’s lead manager or registrar.
Yes, you can apply for multiple IPOs of different companies using the same ASBA facility of your bank during the respective IPO subscription periods.
You can log in to your net banking account, navigate to the IPO section, and check the details of your IPO application, including the number of shares applied for and the status of the application.
If you are not allotted any shares or are allotted fewer shares than you applied for, the blocked amount will be refunded to your bank account shortly after the IPO allotment process is completed.
After the IPO allotment process is completed, you can check the allotment status on the website of the registrar or stock exchange where the IPO is listed. The registrar may also send an allotment confirmation to your registered email or mobile number.
No, you can sell IPO shares only after it is listed on the stock exchanges.
Both methods are used for IPO applications, but they involve different mechanisms for blocking the application amount.
Net banking (ASBA) blocks the funds in your bank account, while the UPI method instantly blocks the amount using your UPI ID.
Using net banking for making an IPO application is easy and can be conveniently done from home, office, or any place where you have access to a laptop or mobile.
Your money is kept in your account and you don’t lose interest while the allotment is finalized. You immediately come to know of the allotment if the money gets debited or is unblocked in your account.