Sebon seeks applications to operate new interfaceThe securities market regulator has sought applications from commercial and development banks interested in operating a platform that enables investors to subscribe to shares floated through initial public offering (IPO) without waiting in serpentine queues.
The securities market regulator has sought applications from commercial and development banks interested in operating a platform that enables investors to subscribe to shares floated through initial public offering (IPO) without waiting in serpentine queues.
The Securities Board of Nepal is launching an interface called Application Supported by Blocked Amount (ASBA) on January 14, which allows investors to subscribe to shares floated in the primary market by giving certain instruction to banks. This means IPO subscribers, very soon, will no longer need to wait in long queues for hours.
ASBA is an interface first introduced by the Indian securities market regulator for retail investors in 2008. The ASBA platform basically blocks the money parked in bank accounts of investors who wish to purchase shares issued through the initial public offering. The fund is blocked till the time the stocks are allotted. In other words, the money is debited to the accounts of investors upon allotment of shares.
To avail this service, investors must authorise their banks to block the amount sufficient to subscribe to shares offered to the public.
The Sebon has now initiated the process of selecting such banks, which are referred to as self-certified syndicate banks (SCSBs). In this regard, the Sebon has sought applications from interested commercial and development banks interested in working as SCSBs.
Such class ‘A’ and ‘B’ financial institutions must maintain minimum paid-up capital fixed by the Nepal Rastra Bank and a non-performing asset less than 5 percent of the credit portfolio, says a notice issued by the Sebon. Also, net worth per share of such institutions should be higher than per share capital.
Institutions interested in working as SCSBs should also have a history of remaining in operation for at least five years and generated net profit for the last two consecutive years. They should also have at least four branch offices inside the Kathmandu Valley, says Sebon’s notice.