ASBA mandatory for non-retail investors from May: Sebi

Mumbai, Feb 7 (PTI) Market regulator Sebi today made itmandatory for non-retail investors to apply for shares inpublic and rights offers through ASBA facility -- where moneyis debited from investor''s account only after share allotment.

"The ASBA (Application Supported by Blocked Amounts)facility shall be mandatory for non-retail investors makingapplications in public/rights issues with effect from May 1,2011," Chairman C B Bhave said after a Sebi board meetinghere.

The new norm would be applicable to all non-retailinvestors -- qualified institutional buyers andnon-institutional investors -- bidding for shares in publicoffers of the companies as also rights offers, where sharesare sold to existing shareholders only.

Sebi had introduced ASBA facility for public offers firstin September 2008, when retail investors were allowed toinvest through this facility. The move avoids the investors''money getting blocked between the time of bidding for sharesand final allotment.

Under ASBA mechanism, investors can bid for shares whilethe money remains in his/her bank account and gets debitedonly after allotment of the shares.

The facility eliminates any delays related to refunds forthe unallotted shares. Initially, the facility was offered toretail investors only and was given to other investors in2009. However, it is not yet mandatory for retail investors touse ASBA facility.