I-bankers, brokers want banks to increase Asba presence

I-bankers, brokers want banks to increase Asba presence

Last Updated: Mon, Oct 31, 2011 19:51 hrs

The capital market regulator’s dream of further cutting the primary market timeline may hit a minor bump, with banks showing little interest in pushing Application Supported by Blocked Amount (Asba) at their branches.

Investment bankers and brokers believe the reach of the bidding mechanism is being hampered because even the leading banks provide Asba facilities only at a few branches. The Securities and Exchange Board of India (Sebi) had introduced the concept of Asba for public issues in September 2008, with an aim to bring down the initial public offer (IPO) timeline.

Under Asba, the applicant can bid even as the money remains in his bank account. The account is debited only at the time of allotment. Such a process helps eliminate delay due to refunds and helps speed the whole process.According to data with Sebi, 56 banks have registered with the regulator as Self Certified Syndicate Bank for Asba, i.e. IPO applicants can submit Asba forms in any of these banks provided the branch extends Asba facility.

While all major banks in the country have registered for Asba, the number of branches providing the facility remains low when compared to the branch network of these banks.For instance, while ICICI Bank has a total of 2,539 branches, Asba is available at only 101. Similarly, Axis Bank offers Asba at 160 branches out of its total network of 1,281. HDFC Bank with a network of 2,000 branches offers Asba at its select 102 branches.

Even government-owned State Bank of India, which boasts of nearly 10,000 branches, offers Asba at only 1,060 branches.

Brokers say since banks play a major role in Asba, the facility has to be provided at more branches so that investors across the country can benefit. Incidentally, banks provide Asba only through branches in cities with a significant appetite for IPOs, they say.“Banks do not want to devote time and money in promoting Asba as it is not a ‘core banking’ activity,” says a director of a domestic investment banking firm. “This often creates problems as investors have a tough time applying through Asba, which has now been made mandatory for non-retail applicants. Even in a city like Mumbai or Delhi, not all branches of a bank provide Asba,” he adds.On the other hand, banks claim Asba facilities are made available in cities and branches where the data suggests IPO applicants are present in decent numbers. Making more branches Asba-compliant is an ongoing process and in due time the reach will be exponentially enhanced, they add.

While initially Asba facility was available only for retail applicants, in April 2010 it was extended to institutional investors, before making it mandatory for all non-retail applicants early this year. Further, in its attempt to widen the reach of Asba, the regulator directed stock exchanges to provide the forms on their website. Rough estimates suggest Asba constitutes a significant part of the total number of IPO applications. Brokers feel that after the new mechanism was put in place, more than 80-90 per cent of the applicants opted for Asba.

More from Sify: