How ASBA will benefit investors trading via non-bank-backed brokerages

The Sebi has embarked upon an ambitious plan to implement an IPO-like payment system for secondary market trading

The Securities and Exchange Board of India (Sebi) has embarked upon an ambitious plan to implement an IPO-like payment system for secondary market trading. The move will benefit individual investors who have trading accounts with non-bank-backed brokerages, like Zerodha.

It will do away with the cumbersome process of moving funds back and forth between their banking account and that of the broker’s. We decode the proposed new system for you:

What is ASBA?
 

Introduced in 2008, ASBA, or application supported by blocked amount, is a payment mechanism used for IPO applications. Earlier, investors had to submit cheques or transfer money