ASBA mandatory for non-retail investors from May: Sebi

Market regulator the Securities and Exchange Board of India (Sebi) today made it mandatory for non-retail investors to apply for shares in public and rights offers through ASBA facility -- where money is debited from investor's account only after share allotment.

"The ASBA (Application Supported by Blocked Amounts) facility shall be mandatory for non-retail investors making applications in public/rights issues with effect from May 1, 2011," Chairman C B Bhave said after a Sebi board meeting here.

The new norm would be applicable to all non-retail investors -- qualified institutional buyers and non-institutional investors -- bidding for shares in public offers of the companies as also rights offers, where shares are sold to existing shareholders only.

Sebi had introduced ASBA facility for public offers first in September 2008, when retail investors were allowed to invest through this facility. The move avoids the investors' money getting blocked between the time of bidding for shares and final allotment.

Under ASBA mechanism, investors can bid for shares while the money remains in his/her bank account and gets debited only after allotment of the shares.

The facility eliminates any delays related to refunds for the unallotted shares. Initially, the facility was offered to retail investors only and was given to other investors in 2009. However, it is not yet mandatory for retail investors to use ASBA facility.