In the Nepalese stock market, investors prefer to invest in the primary market than the secondary market because of the low risk involved. Investors who do not know much about the secondary market but are willing to invest in securities enter the primary market. The number of investors applying for IPOs and FPOs issued by companies has increased for the same reason. Securities Board of Nepal (SEBON) has implemented ASBA system to facilitate the investment in the primary market.
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What is ASBA?
The full form of ASBA is Application Supported by Blocked Amount. ASBA is a system of withholding an amount equal to the value of the securities applied by the investor from his/her bank’s account when applying for the purchase of publicly issued securities . This means that the amount of investment is blocked in the investors’ bank account until the allotment of securities (shares/debentures). After the allotment, the allotted amount is withdrawn from his/her respective bank account and the remaining blocked amount is released.
Thus, ASBA system is a system that allows investors to invest directly in publicly issued securities from their own accounts in banks and financial institutions. When investing in securities through this system, you do not have to go to the fixed collection center specified by the Issue manager to apply for shares as in the past.
You can open an account with a bank that has obtained permission from the SEBON to provide ASBA service and apply for the purchase of securities of the desired amount. To view the banks and financial institutions that provide ASBA service in Nepal, click the link below:
What is C-ASBA?
In order to make the ASBA system more organized, accessible and efficient, CDS & Clearing developed integrated software C-ASBA. Earlier, ASBA member banks and financial institutions could apply separately using their software. The C-ASBA system came into implementation since Falgun 11, 2074.
C-ASBA links all the banks and financial institutions providing ASBA related services and the beneficiary account (demat account) and creates a centralized system. This allows for the verification of the bank account details of the investors before entering the applications of the investors.
Banks and financial institutions give CRN (C-ASBA Registration Number) to each investor after verifying the beneficiary account of the investor. Only investors who have obtained the CRN number can apply for the purchase of shares from their bank account. Investors who do not have internet service can also apply by going to the bank with their CRN number and filling up the physical form.
The use of this system verifies the details of the applicants in the issuance of securities. As a result, the issue manager does not have to re-verify the details of all the applicants. This will allow the allotment and distribution of the shares in the short period of time.
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How To Get C-ASBA Registration Number (CRN)?
1. To get the C-ASBA registration number (CRN), you need to visit the approved bank (ASBA Member Banks) that provides ASBA facility.
2. You need to open an account if you previously don’t have a bank account.
3. Once you have the bank account, fill the C-ASBA form provided by the bank.
4. You need demat account information to fill the C-ASBA form.
5. After you submit the form, the bank will verify your dmat account and provide you with the CRN number.
Now, you can apply for primary and right shares of the issuing companies through this CRN number. However, you do not need this number to buy or sell shares in a secondary market.
How To Apply For Primary Share (IPO, FPO, Right) Through C-ASBA?
In order to apply for the purchase of primary share i.e IPO, FPO or right, you have to follow few steps shown below:
Step 1: Open a bank account (in ASBA member bank), dmat account and mero share account (if you wish to apply from your home through online).
For full details, click the link: Basic Requirements To Start Trading In The Stock Market Of Nepal
Step 2: Get the C-ASBA registration number (CRN) from your bank as above.
Step 3: Apply Through Mero share software by logging in to meroshare.cdsc.com.np. As per the Central Depository Services Regulations, 2068 (Second Amendment, 2073), You can get the ‘Mero Share’ facility by paying a fee of Rs. 50/year.
For full details, read: How to apply IPO/FPO/Right Share through Asba In Meroshare?
Step 4: Even if you don’t have a Mero Share Account, you can apply for the IPO, FPO or Right issue. For this you should visit your bank that provides ASBA facility. Fill up and submit the physical form for the current issue by providing information about your CRN number, dmat number, bank account number and others.