Securities and Exchange Board of India (SEBI) has permitted the State Bank, ICICI bank and 14 other banks to accept ASBAs (application supported blocked amount). It aims at enabling better participation by corporate investors and HNIs in IPOs or rights issues.

With the ASBA facility, money is not released from the applicant's account till the shares are allotted to him while applying for the IPOs or right issue.

In addition to these two banks, SEBI has allowed this facility to Axis Bank, State Bank of Hyderabad, Corporation Bank, State Bank of Travancore, IDBI Bank, State Bank of Bikaner and Jaipur, Yes Bank, Punjab National Bank, Deutsche Bank, Union Bank of India, HDFC Bank, Bank of Baroda, Vijaya Bank and Bank of Maharashtra.

According to a release, these banks have been authorized to accept ASBAs in all issues from January 1.
Earlier this month, Sebi extended the ASBA facility to corporate investors and high networth individuals (HNIs).

This was earlier available only to retail investors. However, qualified institutional buyers (QIBs) are not eligible to apply for public or rights issues using the ASBA facility.

SEBI further said that other banks would be allowed this facility as soon as they submit the required certificate.

ASBA was introduced in 2008. Since then it has been implemented in more than 20 issues and has benefited investors, issuers and the markets.

With the help of ASBA facility, an investor need not pay the application money by cheque rather block his/her account to the extent of application money and thus continue to earn interest on application money, he does not even have to worry about refunds since only an amount proportionate to securities allotted is taken from the bank account when his/her application is selected for allotment after the basis of allotment.