We were getting lot many queries for IPO blocked amount refund status and time limit. Therefore, we like to share our thoughts to reduce your worries to make you an aware investor.
IPO Blocked Amount
Nowadays when you apply for an IPO then instead of debiting the application amount from your account. Your bank puts a lien on the application amount. In case you get the allotment of the shares then only the amount will debit in proportion to the allotted shares. Otherwise, your banks unblock the amount in your account for normal usage. This facility is referred to as ASBA Facility.
ASBA stands for ” Application Supported by the blocked amount”. Using the ASBA facility, investors authorizes self-certified syndicate banks to block application amount for IPO subscription. SEBI has mandated the ASBA facility for all investors to reduce the timeline for refund initiation. Under ASBA, investors continue to earn interest on the blocked amount during the IPO application process. Once the allotment completes, then your syndicate bank will remove the lien on the blocked amount. As the amount lies in your account, so chances of refund initiation-related issues reduce.
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IPO Blocked Amount – Refund Status and Time Limit
Owing to so many refund-related complaints, SEBI has reduced the timelines for refunds issue. Now it is reduced to four days in case of non-receipt of minimum subscription. Earlier this timeline was 7 days. However, Sebi allows up to to 15 days to merchant bankers/SBSB to complete this process. This terrific step becomes possible only because of the wide usage of ASBA and UPI in the IPO application process.
In case the company does not get permission to list on the stock exchanges. After closing the IPO application process, money should refund back in the next 4 days. Your bank is supposed to release the blocked amount automatically by the mandate end date. In case the release is not processed by your bank, you can reach out to your bank or escalate at email@example.com to NPCI.