ASBA from mid-January next year

Kathmandu, Nov. 26: The Securities Board of Nepal (SEBON) Saturday informed that it was implementing a new system to do away with hassles while filing applications for share procurement and make the public offerings of securities faster and more transparent.

Issuing a press statement, it said that the new system on Application Supported by Blocked Amount (ASBA) would come into effect from January 14^th next year. 

The ASBA is prepared as per the provisions of Securities Procurement (Public Offering) Directives, 2016.

According to the India Times, ASBA refers to an application mechanism for subscribing to initial public offers (IPO).

The system, which ensures that the applicant's money remains in his/her bank account till the shares are allotted, was introduced by the Securities Board of India (SEBI) for retail investors in 2008.

The system was developed by the SEBI.

The ASBA system will block the money in the share applicant's bank account until the shares are allotted.

If any share is not allotted to the applicant, the bank will unblock the money upon the instruction of the issue manager.

If the applicant is allotted the shares, the required money will be debited from his bank account.

The SEBON has called for application from the bank and financial institutions to participate in the ASBA system.

Any commercial or development bank that has maintained minimum paid up capital as prescribed by the Nepal Rastra Bank, has been in operation for last five years and earning profit for the last two years, has at least four branches in the Kathmandu Valley, and listed in the Nepal Stock Exchange Limited are eligible for the ASBA system.

The banks should also have per share net worth higher than per share paid up capital and its non-performing loan should be less than five per cent.

SEBON spokesperson Niraj Giri said that the implementation of new system would assist in structural reform in the primary market.