InvestmentFinancial Glossary
ASBA (Application Supported by Blocked Amount)
Definition
A mechanism for applying in IPOs, rights issues, and bond offerings where the application amount is blocked in your bank account rather than debited. The money remains in your account earning interest until the allotment is finalized. If you do not receive allotment, the block is released. All IPO applications in India now mandatorily use ASBA.
Why It Matters
Before ASBA, IPO applicants had to pay upfront and wait weeks for refunds on non-allotment. ASBA solved this by ensuring you never lose access to your money — it remains in your account, earning interest, until shares are actually allotted. This has made IPO applications virtually risk-free from a cash-flow perspective.