Sebi extends ASBA facility to institutional investors

Market regulator the Securities and Exchanges Board of India (Sebi) has extended the ASBA facility, under which deposits of public issue applicants would remain in their accounts till the shares are alloted, to institutional investors.

The new rule would be effective from May 1.

"The Sebi has decided to extend the ASBA (Application Supported by Blocked Amount) facility to QIBs (Qualified Institutional Buyers) in public issues opening on or after May 1, 2010," the regulator said in a release.

With this move the ASBA facility will be made available to all market participants. Retail and high networth individuals (HNIs) are already eligible to use this facility.

The move would help the investors save interest cost on borrowing and also help get rid of the hassles associated with refund to investors.

SMC Capitals Equity head Jagannadham Thunuguntla said: "The Sebi has given a level-playing field to all classes of investors. It is a help the institutional investors to save the interest cost."

The ASBA was first used in the public issue of 20 Microns September last year, where around 10 per cent of the retail applicants used this facility. Last year, ASBA facility was also used in the rights issue of Tata Motors.