SEBI, India’s main securities market regulator has recently implemented Application Supported by Blocked Amount (ASBA) facility in April 2023 for which of the following purposes?

streamlining the process of applying share in an IPO

SEBI, India’s main securities market regulator has recently implemented Application Supported by Blocked Amount (ASBA) facility for secondary market trading. ASBA is a payment mechanism that allows investors to block their funds in their savings accounts instead of transferring the money to the broker’s account during IPO subscriptions. This ensures the safety of investor funds and streamlines the process of applying for shares in an IPO, with a reduction in the time taken for refunds and providing greater liquidity to investors. This method allows investors to block their funds in their accounts while placing an order. Once the order is executed, the funds will remain blocked until the shares are credited to the demat account. This approach can offer several benefits for investors, such as transparency, enhanced control over their funds, and interest earnings on their blocked funds until the time of the actual debit.