Money
Finance cos permitted to provide ASBA service
Finance companies will be permitted to provide Application Supported by Blocked Amount (ASBA) service from Tuesday, the Securities Board of Nepal (Sebon) said.Finance companies will be permitted to provide Application Supported by Blocked Amount (ASBA) service from Tuesday, the Securities Board of Nepal (Sebon) said.
Commercial and development banks have been offering this service, which greatly reduces hassles for investors in the stock market, since January.
The ASBA interface blocks the money in the bank accounts of investors who wish to subscribe for shares during initial public offerings (IPO) and further public offerings (FPO). The funds are blocked until the shares are allotted. This saves investors the bother of standing in a long queue to submit their share applications at IPOs
and FPOs.
“Sebon will be allowing C class financial institutions too to operate the platform from Tuesday,” said Sebon Chairman Rewat Bahadur Karki. According to him, five to six finance companies have applied for an ASBA operating licence.
Finance companies interested in providing ASBA service should be national level institutions. Similarly, their paid-up capital should be up to the level prescribed by Nepal Rastra Bank and their non-performing loans should not cross 5 percent. Among other criteria, hopeful finance companies should have earned profits in the last two years and they should be operating at least two branches in the Kathmandu Valley.
All the commercial banks in the country, except Rastriya Banijya Bank, have obtained operating licences to provide ASBA service. Sebon has also issued ASBA permits to a number of development banks.
These financial institutions offer ASBA service from 2,100 outlets in 73 districts. According to Sebon, the service is not available to people in Mugu and Bajura districts.
ASBA is expected make life easier for stock market investors. Nepal SBI Bank recently launched Online ASBA and Online D-mat services. Karki said a number of other commercial banks were also planning to offer online services.
Sebon has permitted banks to charge a commission of up to Rs250 to process a share application. Most banks have been charging Rs100 per application, according to Sebon.
Despite the launch of ASBA service, many subscribers are still found standing in long lines to submit their share applications as they don’t know about it. Karki said they had started an information campaign to educate the public about the service.