Mumbai: Market regulator SEBI It said on Monday that only those applications in public offerings in which the required funds are blocked in the bank accounts of investors will be uploaded on the platforms of the exchanges and will be counted as valid. The move is aimed at mitigating the menace of false applications, which were seen especially in the recent large number of IPOs. Bids were placed in these but the investors did not allow the money to be blocked in their accounts by authorization. is i Exchange.
Currently, in every IPO, the investor first applies in the offer through online bids through his broker. Once the application is accepted on the exchange, a UPI authorization link is sent for approval. Once the UPI authorization code is approved by the investor, an amount equal to the application amount gets blocked in the investor’s bank account. This blocking is called asba (Application supported by blocked amount). Those who cannot use UPI are also allowed by submitting an ASBA form to their banks through their bidding broker.
In the recent IPOs, a large number of investors bid in the offers but did not authorize the UPI link. This unfairly increased the total number of applications in the IPO. Such bids were rejected. 21,000 crores LIC IPO, around 20 lakh applications were rejected, mostly through UPI mode for non-authorization of ASBA.
SEBI on Monday said that from September 1, all applications for public issue will be processed only if the application money is blocked in the investor’s bank accounts. “Stock exchanges shall accept ASBA in their electronic book-building platform only with mandatory confirmation of blocked application amount,” the regulator said. This will be applicable for all categories of investors – retail, qualified institutional buyers, non-institutional investors and other reserved categories and also for all modes through which applications are processed.
In an IPO, often one offer is subscribed and the number of applications prompts other investors to come and bid. This creates a vicious cycle of higher number of bids and subscription amounts that attracts more investors, which in turn leads to even higher bids and subscriptions. However, some unscrupulous middlemen were manipulating the system through the UPI authorization process. Traders said that this will be stopped by the instructions of SEBI.
Currently, in every IPO, the investor first applies in the offer through online bids through his broker. Once the application is accepted on the exchange, a UPI authorization link is sent for approval. Once the UPI authorization code is approved by the investor, an amount equal to the application amount gets blocked in the investor’s bank account. This blocking is called asba (Application supported by blocked amount). Those who cannot use UPI are also allowed by submitting an ASBA form to their banks through their bidding broker.
In the recent IPOs, a large number of investors bid in the offers but did not authorize the UPI link. This unfairly increased the total number of applications in the IPO. Such bids were rejected. 21,000 crores LIC IPO, around 20 lakh applications were rejected, mostly through UPI mode for non-authorization of ASBA.
SEBI on Monday said that from September 1, all applications for public issue will be processed only if the application money is blocked in the investor’s bank accounts. “Stock exchanges shall accept ASBA in their electronic book-building platform only with mandatory confirmation of blocked application amount,” the regulator said. This will be applicable for all categories of investors – retail, qualified institutional buyers, non-institutional investors and other reserved categories and also for all modes through which applications are processed.
In an IPO, often one offer is subscribed and the number of applications prompts other investors to come and bid. This creates a vicious cycle of higher number of bids and subscription amounts that attracts more investors, which in turn leads to even higher bids and subscriptions. However, some unscrupulous middlemen were manipulating the system through the UPI authorization process. Traders said that this will be stopped by the instructions of SEBI.