SEBI extends ASBA implementation for MFs to Oct 1

BSE | NSE 10/02/12

The Securities and Exchange Board of India (SEBI) has extended the implementation of application supported by blocked amount (ASBA) for mutual funds. Investors can now avail the facility in new fund offers (NFOs) from October 1 instead of the earlier directed July 1, 2010.

The board introduced ASBA for public issues in September 2008 to bring down the time taken for initial public offers.

How will it help?

Under ASBA, the applicant can submit his/her bid even as the money stays in the bank account and none of the parties can use it. The money is debited at the time the shares are allotted.

This eliminates delays related to refunds, thus speeding up the process.

Certified financial planner Suresh Sadagopan believes this to be a good move. "The investors paying in advance are at an advantage as they are paid interest on the funds that are blocked, which was not the case earlier."

This facility which was available only for retail applicants initially was extended to institutional investors in April.