SEBI had issued new guidelines for new IPOs. The new guidelines of Applications Supported by Blocked Amount (ASBA) allows investors to apply for an IPO, keeping the application money in their bank accounts till the finalisation of the allotment.

20 Microns Ltd is set to become the first company to come out with an initial public offer (IPO) through the new Securities and Exchange Board of India (SEBI) guidelines of Applications Supported by Blocked Amount (ASBA).

"We are offering 20 Microns Ltd's IPO under the new Sebi guidelines through applications supported by blocked amount' (ASBA). The investors will have to fill up an application form with their name, PAN number and DPID details to any of the five designated banks--State Bank of India (SBI), HDFC Bank, ICICI Bank, Corporation Bank and Union Bank--to block the application money in a bank account," Keynote Corporate Services' vice-chairman, B Madhuprasad, told PTI here today.

The new system will help retail investors whose IPO application money is often blocked for weeks even when they are not allotted shares, Madhuprasad said.

The investors would benefit because they won't have to pay anything upfront. So the cash won't be required to be paid immediately. Of course, the funds would be blocked with the bank. The time and costs involved in waiting to get the refunds and then crediting them to the account would be eliminated altogether.

This process will also do away with the IPO refund process. This will also shorten the time between a public issue and its listing, since listing happens only after refunds are done.