Investors reluctant to adopt ASBASecurities Board of Nepal (Sebon) last week launched the Applications Supported by Blocked Amount (ASBA)—a platform aimed at enabling investors to subscribe to primary share issuance without having to wait in serpentine queues—amid much fanfare.
Securities Board of Nepal (Sebon) last week launched the Applications Supported by Blocked Amount (ASBA)—a platform aimed at enabling investors to subscribe to primary share issuance without having to wait in serpentine queues—amid much fanfare.
However, investors seem to be unwilling to adopt the new system, as long queues—which the platform seeks to eliminate—were seen at an Everest Bank branch at New Road to subscribe to Forward Community Microfinance’s IPO, which was launched on Sunday under the new interface.
While some in the queue said they were not clear about the procedure, others complained about high commission charged by banks.
ASBA is the platform that basically blocks the money deposited in bank accounts of investors who wish to purchase shares issued through IPO and further public offering (FPO). The fund is blocked until the stocks are allotted.
Dhana Bahadur Thapa, a resident of Kalanki who was found standing in the queue, expressed confusion over the registration procedure of the new system. “I tried to apply to the IPO through the ASBA system with my bank account in NMB Bank. But I could not understand how it worked,” he said.
Jyotsana Shrestha of Newroad, who had queued up for more than two hours, said she was not even aware of the platform’s implementation.
Ganesh Prasad Panthi of Banasthali echoed Shrestha. “I won’t say I don’t know anything about the ASBA interface, but I preferred not to take the risk of missing the IPO deadline which is likely to close by Wednesday,” he said.
The ASBA platform is currently not mandatory and investors can still apply to primary share issuance by drawing out cheque or cash. Sebon provides licence to A- and B-class financial institutions to operate the ASBA system. As of now, it has permitted 34 such financial institutions, which have been offering the service through their 1,761 branches located across the country.
Investors also complained about high commission that banks charge for the service. Jitendra Ranjit, a resident of Newroad, said he chose to stand in the long queue just to avoid paying “exorbitant commission” to banks.
Sebon has permitted banks to take commission up to Rs250 for the processing of an application form, but it said most of the banks have been charging only Rs100 per application.
Ranjit said banks should reduce the commission amount to encourage investors to use the service. “As investors also submit share applications on behalf of their family members, they have to pay a large amount in commission,” said Ranjit, showing more than 10 application forms with him.
Sebon, however, said banks charge the commission to compensate their administrative costs. Spokesperson Niraj Giri said the commission amount was nominal compared to hassles investors face while applying for primary shares under the old system.
Giri expressed hope the commission rate would come down due to competition after more financial institutions adopt the ASBA system. “Some of the licenced banks have even expressed their readiness to offer the service at Rs50 per share application,” Giri said.