ASBA charge is very popular among the investors of public companies when applying for initial public offerings (IPO). If you are applying for initial public offerings (IPO), you might already know that a certain fee is deducted as a CASBA charge from your bank account. Some people also refer to the ASBA charge as the IPO charge, which is a service charge.
In this article, we will learn about the ASBA/CASBA charges of different commercial banks in Nepal. And know why the bank charges the CASBA fee while applying for an IPO?
ASBA/ C-ASBA Charges of Commercial Banks in Nepal
Currently, all the banks and financial institutions providing ASBA service can take ASBA charges up to Rs. 5 per application only. Therefore, the ASBA charge of most of the commercial banks in Nepal is Rs. 5 per application. Some commercial banks are not taking any ASBA charges.
The following is the list of C-ASBA / ASBA charges deducted by Commercial Banks in Nepal while applying for an IPO.
| S.N | Name of Commercial Banks | ASBA / CASBA Charges Per Application |
|---|---|---|
| 01 | Nabil Bank Limited | Free |
| 02 | NIC Asia Bank Limited | NPR. 5 |
| 03 | Rastriya Banijya Bank Limited | Free |
| 04 | Sanima Bank Limited | Free |
| 05 | Nepal Bank Limited | Free |
| 06 | NMB Bank Limited | Free |
| 07 | Siddharth Bank Limited | Free |
| 08 | Agriculture Development Bank Limited | NPR 5.00 |
| 09 | Citizens Bank International Limited | NPR 5.00 |
| 10 | Everest Bank Limited (A Joint Venture with Punjab National Bank, India) | NPR 5.00 |
| 11 | Global IME Bank Limited (After the merger with Bank of Kathmandu Limited) | NPR 5.00 |
| 12 | Himalayan Bank Limited (After the merger with Civil Bank Limited) | NPR 5.00 |
| 13 | Kumari Bank Limited | NPR 5.00 |
| 14 | Laxmi Bank Limited (After the merger with Sunrise Bank Limited) | NPR 5.00 |
| 15 | Machhapuchhre Bank Limited | NPR 5.00 |
| 16 | Nepa Investment Mega Bank Limited (After the merger with Mega Bank Nepal Limited) | NPR 5.00 |
| 17 | Nepal SBI Bank Limited | NPR 5.00 |
| 18 | Prabhu Bank Limited (After the acquisition of Century Commercial Bank Limited) | NPR 5.00 |
| 19 | Prime Commercial Bank Limited | NPR 5.00 |
| 20 | Standard Chartered Bank Nepal Limited | NPR 5.00 |
What is ASBA? (ASBA Charges Meaning)
The full form of ASBA is Application Supported by Blocked Amount. ASBA is a service charge deducted by the Bank which provides the service of blocking an amount equal to the amount required if the applied quantity of share is allotted to the account holder.
In this way, banks help the account holder to prevent using that part of the amount which will be enough at least to buy the applied quantity of shares. ASBA charge can be said as a charge deducted by the bank while fulfilling the account holder’s standing order. With the ASBA service, investors applying for publicly issued securities can directly invest from their own Bank account.
If you apply for IPO through MeroShare, at the same time you will also trigger your bank to block the specific amount on your account. In such a case, the centralized system of ASBA informs banks to hold that certain amount and the bank does the same.
After allotment of the applied IPO, if any number of shares is allotted to the account holder, the amount required for the allotted quantity of securities gets deducted. And the rest of the amount gets released as usable balance.
As the ASBA charge is independently charged by the bank, there is no relation between the charge and the allotment of shares. Also as the amount is not debited immediately, you will continue to receive the promised interest rate on the blocked amount.
What is C-ASBA?
C-ASBA is an organized and centralized form of ASBA. C-ASBA is developed by CDSC that links all the Banks and Financial institutions providing ASBA service and the Demat accounts creating a centralized system. The Centralized Application Supported by Blocked Amount (C-ASBA) service makes the application verification process easy. The C-ASBA system came into implementation from Falgun 11, 2074.
To use the C-ASBA service, one must obtain the C-ASBA Registration Number (CRN). Otherwise, it wouldn’t be possible to apply for the IPO from their own Bank account. CRN is the way that shows the link between the bank account and the Demat account of the person applying for IPO.
There are two ways to apply for an IPO in Nepal. One is online through MeroShare, and another method is by visiting the Bank and filling out the ASBA form. In both cases, you may have to pay an extra amount for the C-ASBA service depending on the Bank. The amount of the C-ASBA charge depends upon the bank you are choosing to apply for the IPO.
The C-ASBA charge is revised by Banks from time to time. If you find anything incorrect, please let us know in the comment section below.
Many Banks that used to provide free C-ASBA service have started to charge some amount for this service. The reason behind it is, that in the current scenario, many companies are making an initial public offering. Similarly, the number of investors applying for IPO has also increased drastically. Which is helping Banks and Financial institutions to make easy revenue from the C-ASBA service.
A bank that can collect 100,000 applications can now earn NPR. 5 lakhs per IPO from the service that they were providing for free. Therefore, we can see the change in IPO charges in Nepal.
Banks Providing Free ASBA Service In Nepal
Out of 20 commercial banks in Nepal, only 8 of them are providing the ASBA service for free in Nepal. The following are the C ASBA charge-free banks in Nepal.
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Kumari Bank Limited
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Nabil Bank Limited
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Nepal Bank Limited
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NIC Asia Bank Limited (not free anymore)
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NMB Bank Limited
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Rastriya Banijya Bank Limited
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Sanima Bank Limited
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Siddharth Bank Limited
Frequently Asked Questions Related To C-ASBA Charge in Nepal 2022
What is ASBA?
The full form of ASBA is Application Supported by Blocked Amount. In this service, Bank blocks money on the specified Bank account as per customers’ requirements. Such an amount will remain blocked on the customer account until the date of allotment of IPO/ FPO.
Which Banks in Nepal Offer Free ASBA?
Out of 20 commercial banks in Nepal, only 8 of the following Commercial Banks are Offering free ASBA services in Nepal.
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Kumari Bank Limited
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Nabil Bank Limited
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Nepal Bank Limited
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NMB Bank Limited
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Rastriya Banijya Bank Limited
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Sanima Bank Limited
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Siddharth Bank Limited
Why does the Bank Deduct the ASBA charge?
Banks debit a small amount as the ASBA charge for providing the service of blocking an amount equal to the amount required if the applied quantity of share is allotted to the account holder.
Can I Earn Interest in ASBA?
Yes. You can earn interest on ASBA (the amount blocked in the bank account while applying for IPO)
As you submit the application, your money gets blocked in the account until the allotment of the shares. The amount as per the allotment is debited from your bank account only after the allotment process.
Therefore, you will continue to earn regular interest in the application supported by the blocked amount (ASBA) held in the account during the time frame.
Why is ASBA Important?
Through ASBA, you can apply for shares during Initial Public Offering (IPO), Further Public Offer (FPO), or Mutual Fund, through your bank account.
Which Bank has the highest amount of ASBA charge?
Standard Chartered Bank used to charge the highest ASBA charge, NPR 100 per application. Due to the effect of SEBON’s circular, the ASBA charge can not be more than Rs. 5 per application. Therefore, after August 2022, the ASBA charge of Standard Chartered Bank Limited is only Rs. 5 per application.
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