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With reference to the Application Supported by Blocked Amount system, consider the following statements:
- It is developed by the Securities and Exchange Board of India.
- The process of blocking is carried out by the Self-Certified Syndicate Banks.
Which of the statements given above is/are correct?
- a)1 Only
- b)2 Only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
With reference to the Application Supported by Blocked Amount system, ...
Application Supported by Blocked Amount (ASBA) System
ASBA is a payment mechanism for subscribing to initial public offerings (IPOs), follow-on public offers (FPOs), rights issue, and bond issues. It is a process in which the applicant's bank account is debited only after the allotment of shares is made. This mechanism ensures that the investor's money is blocked in the bank account and not debited until the shares are allotted to him.
Developed by SEBI
The ASBA system was introduced by the Securities and Exchange Board of India (SEBI) in 2008. It was developed to make the IPO/FPO subscription process more efficient and investor-friendly. The ASBA system eliminates the need for refunds and reduces the time taken for the allotment of shares.
Process of Blocking
The process of blocking is carried out by the Self-Certified Syndicate Banks (SCSBs). These banks are authorized by SEBI to block the investor's funds in their bank accounts. The SCSBs are also responsible for verifying the investor's details and ensuring that the application is correct.
Advantages of ASBA
The ASBA system has several advantages over the traditional payment mechanism for IPO/FPO subscription. Some of them are:
1. No need for refunds: In the traditional payment mechanism, investors had to wait for refunds if the shares were not allotted to them. This process was time-consuming and often led to delays. The ASBA system eliminates the need for refunds as the money is blocked in the investor's bank account until the shares are allotted.
2. Faster allotment: The ASBA system reduces the time taken for the allotment of shares. In the traditional payment mechanism, the allotment process could take up to two weeks. With the ASBA system, the allotment process is completed within a few days.
3. User-friendly: The ASBA system is user-friendly and easy to use. Investors can apply for IPO/FPO subscriptions through their bank accounts without any hassle.
Conclusion
In conclusion, the ASBA system is a payment mechanism that has revolutionized the IPO/FPO subscription process. It ensures that the investor's money is blocked in the bank account and not debited until the shares are allotted to him. The ASBA system has several advantages over the traditional payment mechanism, making it a popular choice among investors.
ASBA is a payment mechanism for subscribing to initial public offerings (IPOs), follow-on public offers (FPOs), rights issue, and bond issues. It is a process in which the applicant's bank account is debited only after the allotment of shares is made. This mechanism ensures that the investor's money is blocked in the bank account and not debited until the shares are allotted to him.
Developed by SEBI
The ASBA system was introduced by the Securities and Exchange Board of India (SEBI) in 2008. It was developed to make the IPO/FPO subscription process more efficient and investor-friendly. The ASBA system eliminates the need for refunds and reduces the time taken for the allotment of shares.
Process of Blocking
The process of blocking is carried out by the Self-Certified Syndicate Banks (SCSBs). These banks are authorized by SEBI to block the investor's funds in their bank accounts. The SCSBs are also responsible for verifying the investor's details and ensuring that the application is correct.
Advantages of ASBA
The ASBA system has several advantages over the traditional payment mechanism for IPO/FPO subscription. Some of them are:
1. No need for refunds: In the traditional payment mechanism, investors had to wait for refunds if the shares were not allotted to them. This process was time-consuming and often led to delays. The ASBA system eliminates the need for refunds as the money is blocked in the investor's bank account until the shares are allotted.
2. Faster allotment: The ASBA system reduces the time taken for the allotment of shares. In the traditional payment mechanism, the allotment process could take up to two weeks. With the ASBA system, the allotment process is completed within a few days.
3. User-friendly: The ASBA system is user-friendly and easy to use. Investors can apply for IPO/FPO subscriptions through their bank accounts without any hassle.
Conclusion
In conclusion, the ASBA system is a payment mechanism that has revolutionized the IPO/FPO subscription process. It ensures that the investor's money is blocked in the bank account and not debited until the shares are allotted to him. The ASBA system has several advantages over the traditional payment mechanism, making it a popular choice among investors.
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Community Answer
With reference to the Application Supported by Blocked Amount system, ...
Recently, The Securities and Exchange Board of India (Sebi) gave details of a proposed framework for shifting to a new payments system for secondary market trades.
- This process is developed by SEBI to apply for IPOs, Rights and Debts Issues, FPS and more.
- It entails that the amount to be paid for subscribing to the shares does not get debited from the investor’s account until the shares have been allotted by the company.
- Investors can apply for ASBA and have the bank block out the application money until the shares get allotted to the investor.
- This system will provide the authorization of the investor to subscribe only when the application is selected for the issue.
- This blocking is carried out by Self-Certified Syndicate Banks (SCSB).
- Upon the approval of the issue to the investor, the funds are paid accordingly.
- Self-Certified Syndicate Banks (SCSBs): These are SEBI-authorized banks that conform to the conditions laid by SEBI to accept the applications, and verify and block the amount.
Hence both statements are correct.
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With reference to the Application Supported by Blocked Amount system, consider the following statements: It is developed by the Securities and Exchange Board of India. The process of blocking is carried out by the Self-Certified Syndicate Banks.Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?
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With reference to the Application Supported by Blocked Amount system, consider the following statements: It is developed by the Securities and Exchange Board of India. The process of blocking is carried out by the Self-Certified Syndicate Banks.Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to the Application Supported by Blocked Amount system, consider the following statements: It is developed by the Securities and Exchange Board of India. The process of blocking is carried out by the Self-Certified Syndicate Banks.Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to the Application Supported by Blocked Amount system, consider the following statements: It is developed by the Securities and Exchange Board of India. The process of blocking is carried out by the Self-Certified Syndicate Banks.Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?.
With reference to the Application Supported by Blocked Amount system, consider the following statements: It is developed by the Securities and Exchange Board of India. The process of blocking is carried out by the Self-Certified Syndicate Banks.Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to the Application Supported by Blocked Amount system, consider the following statements: It is developed by the Securities and Exchange Board of India. The process of blocking is carried out by the Self-Certified Syndicate Banks.Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to the Application Supported by Blocked Amount system, consider the following statements: It is developed by the Securities and Exchange Board of India. The process of blocking is carried out by the Self-Certified Syndicate Banks.Which of the statements given above is/are correct?a)1 Onlyb)2 Onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?.
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