Market regulator SEBI today extended the deadline for mutual funds to implement the ASBA facility for new fund offers to October 1.
Under ASBA–Application Supported by Blocked Amount– deposits of applicants remain in their accounts till the shares are allotted.
“It has been decided that Mutual Funds/AMCs shall provide ASBA facility to investors for all NFOs launched on or after October 1,2010,” the Securities and Exchange Board of India (Sebi) said in a circular.
Earlier in March Sebi had made it compulsory for MFs to extend ASBA facility for all NFOs from July 1.
ASBA is currently in place for all participants in the Indian capital market.
The move would help investors save interest cost on borrowing and help companies get rid of the hassles associated with refunds.
However,some experts feel that the said move will not have much implication for the market,since mutual funds get most subscription in last days of its closing.
Sebi said the move would “protect the interest of investors in securities and promote the development and better regulation of the securities market.”
In March the market regulator had also reduced the period between the opening and closing of issues from the present 30-45 days to 15 days to ensure that investors’ money is not blocked for longer period.