Sebi seeks ASBA facility at all branches of designated banks

Sebi introduced ASBA facility in 2008, under which an application for subscribing to an issue involves blocking of application money in the bank a/c

Market regulator Sebi today asked the banks, authorised to accept ASBA forms wherein bid amount for public offer shares remain in investors' accounts till allotment, at all their branches by the end of 2012.

Sebi (Securities and Exchange Board of India) introduced ASBA (Application Supported by Blocked Amount) facility in 2008, under which an application for subscribing to an issue involves blocking of application money in the bank account.

The facility is provided through Self Certified Syndicate Banks (SCSBs) and any bank desirous of offering ASBA facility need to register with Sebi. However, the facility is not available at all the branches of such banks.

In a circular issued today, Sebi said that it has been felt that ASBA facility should be provided at all branches of Self Certified Syndicate Banks (SCSBs).

To achieve this goal, Sebi said that in the first phase each SCSB should designate 50% its total branches as 'Designated Branches' for ASBA by October 31, 2012.

In the second phase, each SCSB should designate all of its branches as 'Designated Branches' for ASBA by December 31, 2012.

Sebi also asked all the SCSBs to submit a status report for each of the two phases within 15 days from the due date of the respective phases.

As per the latest data available with Sebi, there are a total of 40 banks registered as SCSBs.

Out of these, the ASBA facility is available at just one branch in cases of at least nine banks, including HSBC, Citibank, Deutsche Bank and BNP Paribas. Besides, the facility is available at less than 20 branches for most of the banks, including giants like ICICI Bank, SBI and HDFC Bank.

The regulator said that it was announced in this year's union budget there was a need to simplify the process of Initial Public Offers (IPOs), lower the capital raising cost and help companies reach more retail investors in small towns.

"Based on the analysis of the current presence of ASBA facility, it is felt that there is substantial scope for increasing the reach of ASBA facility to make the application process more convenient for investors," Sebi said.

"Towards this end, consultations were held with Reserve Bank of India, Indian Banks' Association and other market participants, to explore the possibility of providing ASBA facility at all branches of Self Certified Syndicate Banks (SCSBs)," it added.