Context:
SEBI moots UPI-like block mechanism for securities market
ASBA:
- Introduced by SEBI in 2008.
- Part of SEBI’s efforts to streamline the IPO process (primary markets) and protect investor interests.
- Function – Allows investors to authorize a Self Certified Syndicate Bank (SCSB) to block funds in their bank account for subscribing to an issue.
- SCSB – Recognized banks capable of providing ASBA services.
- Process – Funds are debited only if the application is selected for allotment after the basis of allotment is finalized.
- ABSA is mandatory for all investors in public and rights issues.
Benefits of ASBA:
- Alternative Payment Mode – Funds remain in the investor’s account until allotment is finalized.
- Multiple Bidding Options – Investors can apply through SCSBs where they hold accounts.
- Interest Earnings – Investors continue to earn interest on blocked funds until debit.
- Direct Settlement – Direct settlement with Clearing Corporation (CC) without intermediary pool accounts.
- Eliminates Custody Risk – Client collateral is not retained by members but transferred to the CC.
Source: The Hindu
Previous Year Question
With reference to ‘National Investment and Infrastructure Fund’, which of the following statements is/are correct?
1. It is an organ of NITI Aayog.
2. It has a corpus of 4, 00,000 crore at present.
Select the correct answer using the code given below:
[UPSC Civil Service Exam – 2017 Prelims]
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: (d)
Explanation:
Statement 1 is not correct. ‘National Investment and Infrastructure Fund’ was set up under SEBI.
Statement 2 is not correct. It has a corpus of 40000 crore.
