SEBI extends ASBA facility to QIBs

SEBI vide circular CIR/CFD/DIL/2/2010 dated April 06, 2010 has extended the Applications Supported by Blocked Amount (ASBA) facility to Qualified Institutional Buyers (QIBs) in public issues opening on or after May 1, 2010. Earlier in December 2009, SEBI had extended ASBA facility to all investor categories like HNIs and corporate investors except QIBs (referred as ASBA Phase II). The rule at that time was QIBs were required to bring in only 10% of application money at the time of placing bids. Later in March 2010, SEBI revised this rule and stated that QIBs should bring in 100% of the application money as margin along with the application for securities in public issues from May 1, 2010. SEBI has now extended the facility of ASBA to QIBs so that while placing the bids, the QIBs need not pay the application money by cheque. Under ASBA facility the bank account of the QIBs would be blocked to the extent of the application money and the application money would get debited from account only if their application is selected for allotment after the basis of allotment is finalized.

A copy of the circular is available here.