ASBA (Application Supported by Blocked Amount) is the system under which your IPO application money never leaves your bank account upfront. The amount is only blocked (held) in your own account, and it is debited only if you are actually allotted shares. No allotment, no debit. The block is simply released.
Why block instead of collect?
Years ago, IPO applications worked on cheques: your money physically left your account, sat with the issue's bankers for days, and came back as a refund if you got nothing. Refunds were slow and interest on the idle money was lost. The market regulator, the Securities and Exchange Board of India (SEBI), replaced that with ASBA: the money stays in your account, keeps earning your savings-account interest, and moves only when there is a real allotment to pay for. For retail applicants today, ASBA is mandatory. There is no "pay now, refund later" route.
What actually happens when I apply?
Let's trace Lakshmi's application for the IPO of Himalaya Agro, a fictional food company, at a cut-off of ₹200 with a lot of 70 shares.
- She applies through her broker using UPI. Her UPI app pops up a mandate request for ₹14,000, one lot at the band's top price.
- She approves the mandate. This is the ASBA block. Her bank balance still shows the money, but ₹14,000 of it is now earmarked and cannot be spent. Nothing has been debited.
- The issue closes and allotment happens. Two outcomes:
- Allotted: the bank debits exactly ₹14,000 against the mandate and the shares are credited to her demat account.
- Not allotted: the mandate is revoked and the ₹14,000 becomes spendable again.
- Partial cases resolve the same way. If the final price is below the band top, or she is allotted fewer lots than she bid for in a category where that is possible, only the exact amount owed is debited and the rest of the block is released.
The UPI mandate is simply the retail-friendly face of ASBA. Larger applications, and applicants who prefer it, can use the direct bank-ASBA route instead. See can I apply for an IPO without UPI?
My IPO is over. Why is the money still blocked?
The block is only supposed to outlive the issue by a short processing window. After the basis of allotment is finalised, non-allottees' funds must be unblocked promptly; if yours is stuck beyond the expected date, the fix usually involves your bank, since the block sits there, not with the broker or the company. Expected timelines and what to do about a stuck block are covered in when will I get my money back after an IPO?
One practical caution: the blocked amount must remain available until allotment. If Lakshmi's balance dips below ₹14,000 when the debit is attempted, her application can fail at the last step.
Things to keep in mind
- Approving the UPI mandate blocks money; it does not pay anyone. The debit happens only against an actual allotment.
- Keep the blocked amount untouched in the account until the allotment is finalised. A failed debit can cost you the allotment.
- Blocked money continues to earn your normal savings-account interest, because it never left your account.
- If a block lingers well after the unblock date, take it up with your bank first, the hold lives in your bank account.
Read next
How does IPO allotment work? — What decides whether you get any shares at all.