ASBA stands for Application Supported by Blocked Amount and is the standard IPO application mechanism in India today. When a retail investor places an IPO bid, the application amount is blocked (frozen) in their bank account using either the traditional ASBA process or the more modern UPI mandate. Crucially, the funds are not debited from the account during the bidding window.
Funds remain blocked until allotment is finalised. If the applicant is allotted shares, the amount equal to the allotted shares is debited and the balance — if any — is unblocked. If the applicant receives no allotment or partial allotment, the unallotted amount is unblocked typically within one or two working days after the basis of allotment.
ASBA was made mandatory by SEBI in 2015 to protect investors and improve cash flow efficiency. Before ASBA, applicants had to write a cheque or transfer funds to an escrow account upfront and wait weeks for a refund on unallocated portions. The current UPI-ASBA flow allows the entire process to complete in under a week.