The Securities and Exchange Board of India has allowed 16 Indian banks to accept application supported blocked amount from corporate investors starting 1 January.

ASBA is a facility used to encourage better participation by corporate investors and high net worth individuals in rights issues and initial public offerings. Investors will consequently be allowed to apply for these offerings without physically parting with their application money; the money will remain with the banks until the shares are actually bought and allotted to buyers.

The banks covered are the State Bank of India, HDFC Bank, ICICI Bank, Punjab National Bank, Bank of Baroda, State Bank of Hyderabad, State Bank of Travancore, State Bank of Bikaner and Jaipur, Union Bank of India, Bank of Maharashtra, Corporation Bank, Deutsche Bank, IDBI Bank, Vijaya Bank, Yes Bank and Axis Bank.

The move comes at an opportune time for Indian investors, who are currently looking for areas to place their money after a long hiatus during the global crisis; the ASBA structure encourages greater market participation.

Qualified institutional buyers are not yet eligible to use the ASBA facility for rights or public issues.