ASBA- Investor friendly process for investing

What does ASBA mean?

ASBA (Application Supported by Blocked Amounts) is a process developed by the Securities and Exchange Board of India (SEBI) for applying to initial public offerings (IPOs). This has also been extended to all new fund offers (NFOs) of mutual funds from 01 July, 2011. In ASBA, an NFO applicant's account does not get debited until units are allotted to him Click here to know about the latest New Fund Offer How does it benefit a mutual fund investor?
An investor will continue earning interest in the bank account until the NFO closes (the maximum period for an NFO has been reduced to 15 days for all schemes except ELSS) as the applicant's account does not get debited till units are allotted. If the application was by a normal bank cheque, the amount would have been debited on clearance of the cheque in 2-3 days and the investor would not receive interest on the application money during the balance NFO period. What are the requirements for an investor to apply through ASBA facility?
All investors are eligible to apply through ASBA facility, the only primary criteria being that they should have a demat account with self-certified syndicate banks (SCSBs). An investor needs to submit an ASBA form available at their SCSB bank to apply for NFOs. These forms can be submitted either physically or electronically if internet banking facility is provided by the SCSB. What is a self-certified syndicate bank (SCSB)?
Banks which allow retail individual investors to apply in IPOs/ NFOs using ASBA payment method and also certified by SEBI are known as SCSBs. The list of SCSBs
and their designated branches where an ASBA application form can be submitted is available on the websites of the Bombay Stock Exchange (BSE), the National Stock Exchange (NSE) and SEBI. Is ASBA mandatory?
No, ASBA is not mandatory. An investor has the option of making application through ASBA or by a bank cheque. Can an investor invest in Systematic Investment Plans (SIPs) through ASBA?
Since the waiting period in an NFO is longer, ASBA is applicable only for NFOs and not for SIPs in existing mutual fund schemes, which can commence immediately on cheque clearance. Can an investor withdraw / modify his or her ASBA bids for NFOs?
Yes, an investor can withdraw/ modify the bid amount for NFOs. However, this can be done only during the NFO period.