Self Certified Syndicate Bank
Also written SCSB · Self-Certified Syndicate Bank (SCSB)
A banker to an issue, registered with SEBI, that offers ASBA — blocking an applicant's application money in their own bank account until allotment, then debiting or releasing it.
In plain language
When you apply for an IPO today, your money does not leave your bank account when you apply. It is blocked. If you get shares, the blocked amount is debited; if you do not, it is simply released.
The bank that does the blocking is a Self-Certified Syndicate Bank. The workbook defines it as a banker to an issue registered with SEBI which offers the facility of ASBA — Application Supported by Blocked Amount. Since SEBI has made ASBA mandatory for all public issues, every public issue application runs through this machinery.
How it works
The ASBA mandate (sections 3.10 and 3.12). Every stock broker, SCSB, RTA and depository participant accepts bids only with ASBA. Payments in rights issues also run only through ASBA. On allotment, funds are debited or unblocked, as the case may be.
Channels (section 3.12). ASBA applications are submitted to the SCSB with which the investor holds the bank account. SEBI has added:
| Channel | How it works |
|---|---|
| Online ASBA | Through the SCSB's online portal; the SCSB sends the application to the RTA and blocks the funds |
| Physical ASBA | At an SCSB branch; same process |
| Additional online mode | Through a broker's linked trading-demat-bank account |
| UPI with ASBA | For applications through syndicate members, brokers, RTAs and DPs; all individual investors applying for up to Rs 5 lakh must use UPI (from 1 May 2022) |
Banks and UPI apps must send SMS alerts for blocking and unblocking.
A worked example
Illustrative, using the workbook's book-building example. Priya applies for 100 shares in an IPO with a price band of Rs 120–144, bidding at Rs 144 through her bank's net-banking ASBA portal.
Amount blocked in her savings account = 100 × Rs 144 = Rs 14,400
The money stays in her account throughout the bidding period — blocked, not transferred.
The book closes and the cut-off price is Rs 135. Everyone who bid at Rs 135 or above is successful and is allotted at the cut-off price. Suppose her category was not oversubscribed and she receives all 100 shares:
Debited = 100 × Rs 135 = Rs 13,500
Released = Rs 14,400 − Rs 13,500 = Rs 900
Had she bid Rs 130 — below the cut-off — the entire Rs 14,400 would simply have been unblocked. Her bank sends an SMS at each step.
Why NISM asks about it
Chapter 3 (Primary Markets) defines the SCSB in the footnote to the public issue process (section 3.10) and describes the ASBA and UPI channels in section 3.12. Expect questions on who blocks the funds, where an ASBA application is submitted, and the Rs 5 lakh UPI limit for individuals.
Common exam traps
- The money is blocked, not transferred, until allotment is finalised.
- The ASBA application goes to the SCSB where the investor holds the account — not to any bank of the investor's choosing.
- An SCSB is a banker to an issue registered with SEBI, not any bank that happens to offer net banking.
- UPI is mandatory for individuals applying for up to Rs 5 lakh through intermediaries; above that, other ASBA channels are used.
- ASBA applies to rights issues too, not only to IPOs.
Check yourself
1.What does ASBA do with an investor's application money?
- a)Transfers it immediately to the company's escrow account
- b)Blocks it in the investor's own bank account and releases it only on allotment
- c)Holds it with the registrar until listing day
- d)Converts it into a fixed deposit for the issue period
Show the answer
Answer: (b) Blocks it in the investor's own bank account and releases it only on allotment
ASBA — Application Supported by Blocked Amount — is an application containing an authorisation to the investor's bank to block the application money in the bank account, releasing the funds only on allotment.
The money never leaves your account until shares are actually allotted. Where the application is rejected or partly allotted, the amount is simply unblocked.
Applications go to a Self-Certified Syndicate Bank (SCSB) — a banker to an issue, registered with SEBI, that offers the ASBA facility — with which the investor holds his account. SEBI has mandated the ASBA facility for all public issues, and payment in a rights issue must also be through ASBA only.
Retail investors additionally have the UPI route; since 1 May 2022 all individual investors applying for amounts up to ₹5 lakh must use UPI.
Where this is taught
- Series II-A · Chapter 10: Roles and Responsibilities in a Public Issueintroduced here
- Series XII · Chapter 3: Primary Marketsintroduced here
Related terms
- ASBAThe mandatory payment mechanism for public and rights issues, in which your bank blocks the application money in your own account and debits it only if you actually get an allotment.
- Rights issueAn offer of new shares at a set price to existing shareholders in a fixed ratio to what they already hold, so that their proportionate stake is not diluted when the company raises fresh capital.
- Cut-off priceIn a book-built issue, the price at which the issue is fully subscribed. Everyone who bid at or above it succeeds and is allotted at that price.
- Initial Public OfferThe first offer of a company's shares to the public — by fresh issue, by existing shareholders selling through an offer for sale, or both — after which the shares must be listed.
- Sponsor BankA SEBI-registered Banker to the Issue appointed by the issuer as the conduit between the stock exchanges and NPCI, pushing retail investors’ UPI mandate requests and payment instructions into UPI.
- Banker to an issueA scheduled bank or other SEBI-specified banking company that accepts application and allotment monies, refunds application money and pays dividend or interest warrants for an issue.
- Standardised UPI IDsSEBI's framework requiring a verified, validated UPI ID linked to a registered bank account, so an investor paying by UPI for a public issue knows the money is going to a genuine intermediary.