RBI asks ASBA designated bank branches to remain open on Sunday for LIC IPO

LIC's IPO will remain open for subscription even on the weekend, given the large amount the government is looking to raise from the market

The Reserve Bank of India (RBI) has asked all ASBA (Application Supported by Blocked Account)-designated bank branches to remain open on Sunday in order to facilitate bidding for the mega initial public offering (IPO) of the Life Insurance Corporation of India (LIC). This is expected to help people in smaller cities and towns bid for the IPO, especially senior citizens.

“The government of India, in order to facilitate bidding for LIC IPO, has requested that all bank branches designated to process ASBA applications may be kept open for public on May 8, 2022 (Sunday). The matter has been examined and it has been decided that banks may keep all their ASBA designated branches open on May 8, 2022 (Sunday) for the above purpose”, the RBI said in a circular.

ASBA is the mechanism through which investors apply for shares in a public issue. It was decided that the LIC IPO will remain open for subscription even on the weekend, given the large amount the government is looking to raise from the market.

There are as many as 62 self-certified syndicated banks under the direct ASBA facility, according to capital markets regulator Securities and Exchange Board of India (Sebi). Among major banks, State Bank of India has 14,399 ASBA designated ASBA branches, HDFC Bank has just 137, ICICI Bank has 2,971, Axis Bank has 161, Bank of Baroda has 1,830, and Punjab National Bank has 5,462.

This is, perhaps, the first time that bank branches will remain open on a Sunday for an IPO. In the past bank branches have operated on Sundays for tax collection purposes.

The Department of Investment and Public Asset Management (DIPAM) had requested banks to keep their ASBA branches open on Sunday. But banks needed the RBI’s nod to go ahead with it. Hence, DIPAM requested the RBI to allow banks to keep their ASBA designated branches on Sunday as well, a person in the knowledge of the matter said.

The government is looking to raise Rs 20,557 crore by diluting 3.5 per cent in the insurer, making it the biggest public offering of the Indian capital market. LIC has been valued at 1.1 times its embedded value of Rs 5.39 trillion. Post listing, it could have a market capitalisation of Rs 6 trillion, making it one of the most valuable firms in the country.

LIC’s IPO, which opened for subscription on Wednesday, has been fully subscribed. The insurance behemoth on Monday raised Rs 5,627 crore from anchor investors ahead of its IPO, with 71 per cent of the amount coming from domestic mutual funds (MFs).