Fifty-seven banks have so far registered with the Securities and Exchange Board of India (SEBI) for the new alternative payment system for investments in initial public offers (IPOs).
Retail investors can approach any of the 57 banks registered with SEBI to apply for public issues without making payments until they are allotted shares.
The banks, however, have to get self-certified for having undertaken a mock run of their systems with the stock exchanges and registrars to the issues, to start accepting applications for the `Applications Supported by Blocked Amount (ASBA).
"As on date, there are 57 banks registered with SEBI...to act as Self Certified Syndicate Bank for the purpose of (accepting) Applications Supported by Blocked Amount," SEBI said in a statement.
ASBA is an alternative payment system whereby retail investors are to part with their money only when they are alloted shares of public offers.
But the banks would have to keep the amounts blocked in the accounts of the applicants.
At present, there are only 16 banks, including SBI, ICICI Bank and HDFC Bank, are eligible for this purpose.
The new system, which runs parallel to the existing one, allows investors to apply for public issues, keeping the application money in their bank accounts till the finalisation of the allotment.
Investors will, however, benefit because they would not have to pay anything upfront. This will also do away with the refund process and will also shorten the time between a public issue and its listing, since listing happens only after refunds are done.
Vadodara-based 20 Microns Ltd was the first company to come out with an initial public offer (IPO) through the new system.