Use your account in other banks for ASBA: Sebi tells banks
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Market regulator Sebi today asked the banks providing ASBA (Application Supported by Blocked Amount) facility for public offers to use their accounts in other registered banks while making their own applications.
The ASBA facility allows the application money to remain blocked in the applicant's bank account till the time the shares are actually allotted in the public offers and the banks seeking to provide these facilities need to first get registered with Sebi (Securities and Exchange Board of India).
In a fresh circular issued in this regard, Sebi said it has come across reports about certain banks/merchant bankers of misinterpreting certain provisions of guidelines for using ASBA facility and applications by banks have been accepted using an account held with the applicant bank itself.
"...it is clarified that for making applications by banks on own account using ASBA facility, Self Certified Syndicate Banks (SCSBs) should have a separate account in own name with any other Sebi registered SCSB/s," Sebi said.
"Such account should be used solely for the purpose of making application in public issues and clear demarcated funds should be available in such account for ASBA applications," it added.
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.
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