Procedure for Cancelling an ASBA Application for an IPO
Understanding ASBA
ASBA, or Application Supported Book Building, is a method used by Indian investors to apply for Initial Public Offerings (IPOs). Investors who wish to participate in the IPO process but cannot deposit the full amount required for the subscription can use the ASBA system. This method offers an advantage as it allows investors to apply for an IPO without the funds upfront, provided they are sanctioned by a bank. After the issue closes, investors must deposit the required amount within a specified period to confirm their subscription. However, it is important to note that once the application is made, cancellation procedures must be followed according to specific timelines and procedures.
Procedure for Canceling an Application
If you are considering canceling your ASBA application for an IPO, you must act promptly. Here's the detailed procedure:
Visit your trading application or website from which you applied for the IPO.
Navigate to the section where you can manage your ASBA applications. This will typically be under a feature known as 'SECURITY APPLICATIONS' or a similar term.
Locate the option tocancel the application. Sometimes, this might be under a 'CHANGE APPLICATION STATUS' or 'MODIFY APPLICATION' section.
If the IPO has not yet closed, you can cancel the application through your broker's app before the IPO closes for subscription.
For applications under IRFC IPO, you have the option to cancel your ASBA application through Internet Banking, up to 2 PM on the closing day. For SBI, this is until 3 PM. After these times, you must approach the bank officials; they can process the cancellation until 5 PM. Beyond this time, the application cannot be canceled.
Timeliness is Key
It is crucial to act quickly if you wish to cancel your ASBA application. After the IPO closes, you cannot change the application status through the broker's app or the trading platform. This means that once the subscription period ends, all applications are finalized, and late cancellations will not be processed.
Example of Subscription
IRFC IPO has a retail subscription that is 3.66 times oversubscribed. This means that only one out of every four applications will be allotted shares. Even if you have applied using ASBA, there is still a 75% chance that you may not get an allotment. Given the high competition, it might be advisable to reconsider the application if you do not have the financial resources to ensure a subscription.
Additional Tips
Check the specific closing times and procedures for your bank before attempting to cancel the application.
Confirm the status of your application through your trading platform or bank.
Be prepared for the possibility of not getting an allotment, especially if the IPO is oversubscribed.
Conclusion
ASBA is a useful tool for investors looking to participate in IPOs without the immediate need for funds. However, it is essential to understand the cancellation process and timelines. Investors should carefully consider their financial status and the likelihood of getting an allotment before deciding whether to apply or cancel their ASBA application. By following these guidelines, you can navigate the complex IPO process more effectively.