Benefits of ASBA
ASBA stands for Application Supported by Blocked Amount and this refers to a process involved in applying for IPO shares or initial public offerings. ‘Â ASBA can also be applied with FPOs or follow on public offers. ‘Â In the field of investing, getting the ASBA feature can reap various benefits for the would-be investor. ‘Â These benefits include the following:
1. Money safety
The best benefit that investors could get from ASBA is that it requires that a person’s money or bank account be blocked until such time that the IPO shares for example are allotted. ‘Â If the application for these shares have not been finalized yet or if the corresponding shares are not allotted yet, then no amount can be debited from the investor’s bank account. ‘Â With the ASBA process, the hard-earned money of investors will remain intact and safe.
2. Intact interest-earning feature of account
If a particular investment is being considered, most people would follow the standard process of issuing checks for example to cover the possible shares allotment. ‘Â In the case of ASBA, an investor’s account will remain untouched until everything is made final. ‘Â This also means that the account will continue to earn interest until the day that the same account is debited for the corresponding shares allotment. ‘Â With the ASBA process, accounts will continue to have its features and reap interests as they should be.
3. No worries on refunds
Investors also need not worry on possible refunds when their application for IPO or FPO shares goes through the ASBA process. ‘Â This is because the money transfer is done electronically and only after the shares are allotted or finalized. ‘Â The process also allows debiting of accounts with the exact figures for the allotted shares. ‘Â In case of rejected applications, there is also no worry on having to ask for a money-back guarantee or refunds because there is no actual money transfer at the start of the process.
Investing through the ASBA process basically provides an efficient and secure way for investors. ‘Â With the benefits mentioned above, more investors also prefer to make IPO applications or subscriptions using ASBA.