Why the money is blocked, not paid
Before ASBA became mandatory for all IPOs in January 2016, applicants paid upfront and waited weeks for refunds. ASBA flips the order: the bank blocks the amount, the application proceeds, and only allotted applicants see a debit. Your money stays in your account and continues earning interest until the outcome is known.
How it works step by step
You apply through your broker’s app using your UPI ID or bank details. The bank blocks the application amount. The allotment happens after the issue closes. Allotted applicants are debited and receive shares in their demat account. Everyone else sees the block release, usually within a couple of days of the refund date.
The UPI version
Most retail applications today run through UPI: you approve a mandate in your UPI app instead of entering bank details. The mandate is the ASBA block. This is why the app asks for your UPI ID during IPO applications, and why the mandate must be approved before the issue closes or the application is rejected.
Why ASBA became mandatory
Before ASBA, IPO applicants paid the full application amount upfront and waited weeks for refund cheques when allotment failed. The money was gone, the interest was gone, and the refund process was a national administrative burden. SEBI made ASBA mandatory for all IPOs in January 2016. The mechanism flips the order: the bank blocks the amount, the application proceeds, and money moves only for allotted applicants. The blocked amount continues earning interest in your own account throughout.
Allotment day, hour by hour
After the issue closes, the registrar validates applications against PAN deduplication rules and the blocked amounts, then runs the basis of allotment. Allotted applicants see their banks debit the amount, usually on allotment day or the day after. Everyone else sees the mandate expire and the block release. UPI mandates expire on their own after the issue closes; a mandate left hanging past expiry is released by the bank, which is why an unapproved mandate at close is not a hidden liability, only a failed application.
A concrete example
You apply for a ₹15,000 IPO lot. Your bank app shows a ₹15,000 block, not a debit. Two weeks later the allotment lands: if you got shares, ₹15,000 leaves your account and the shares appear in your demat account; if not, the block vanishes and the money was never gone.
Questions people ask about ASBA (Application Supported by Blocked Amount)
The bank releases the block after the issue closes and refunds are processed, usually within a couple of working days of the refund date. Your money never left your account, so there is nothing to “get back”; the block simply disappears.
No. Allotment is credited in demat form, so a demat account is a precondition. A mutual fund folio or a bank account alone cannot receive IPO shares.
While the issue is open, you can withdraw the application through the broker and reapply. After the issue closes, applications are frozen and no modification is possible. If you applied twice from different brokers with the same PAN, the registrar rejects the duplicates and keeps one valid application.
The block sits inside your own bank account, so it carries the same deposit protection as the rest of your balance. It is not moved to the company, the broker or the registrar at any point before allotment.
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