Sebon makes life easier for IPO subscribers

- Post Report, Kathmandu

Dec 24, 2016-

The Securities Board of Nepal (Sebon) has allowed 11 commercial and development banks to operate a platform enabling investors to subscribe for shares during an initial public offering (IPO) without having to wait in serpentine queues.

The securities market regulator is launching an interface called Applications Supported by Blocked Amount (ASBA) in mid-January, which allows investors to subscribe for shares floated in the primary market by giving certain instructions to their banks. 

This means that IPO subscribers, very soon, will no longer need to wait in long queues for hours to subscribe for shares floated in the primary market.

The banks selected for the purpose are Ace Development Bank, Century Commercial Bank, Citizens Bank International, Kailash Development Bank and Kumari Bank, said Sebon in a statement. 

Likewise, Laxmi Bank, NB Bank, NIC Asia Bank, Sanima Bank, Siddhartha Bank and Sunrise Bank have been given permission to operate the platform.

“Another six banks and financial institutions have also expressed interest in operating the ASBA platform. Sebon is reviewing their applications,” the regulator said. ASBA is an interface launched by the Indian securities market regulator for retail investors in 2008. 

The ASBA platform basically blocks the money parked in the bank accounts of potential investors who wish to purchase shares during an IPO. The applicant’s account is debited with the value of the shares after they are allotted. To obtain this service, investors have to authorise their banks to block the amount needed to subscribe for shares offered to the public. The process of selecting such banks, which are referred to as self-certified syndicate banks (SCSBs), was initiated by Sebon last November. 

At that time, Sebon had said that class ‘A’ and ‘B’ financial institutions wishing to operate as SCSBs must maintain the minimum paid-up capital fixed by Nepal Rastra Bank and a non-performing asset of less than 5 percent of the credit portfolio. Also, the net worth per share of such institutions should be higher than the per share capital.

Institutions interested in operating as SCSBs should also have been in operation for at least five years and generated a net profit for the last two consecutive years. They should also have at least four branch offices in the Kathmandu Valley.

Published: 24-12-2016 09:10

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