SEBI extends ASBA facility to QIBs

The Securities and Exchange Board of India has extended the ASBA (application supported by blocked amount) facility, under which deposits of public issue applicants remains in their accounts till the shares are allotted, to institutional investors. The new rule would be effective from 1 May.

"SEBI has decided to extend the ASBA facility to QIBs (qualified institutional buyers) in public issues opening on or after 1 May 2010," SEBI said in a release from Mumbai.

With this, the ASBA facility will be available to all market participants. Retail and high net worth individuals (HNIs) are already eligible for 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.

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