How it unfolds, step by step
The setup
Take an application for 100 shares at ₹100 each. The amount involved is ₹10,000. The mechanism is called Application Supported by Blocked Amount, or ASBA for short. Under it, the bank holds that amount while the application is processed. The money is not debited up front.
What happens next
Suppose the valid outcome is 50 shares at ₹100. That makes ₹5,000 payable for the shares actually allotted. The rest of the blocked amount is released through the applicable process. The multiplication is the easy half. The half people skip is that the quantity applied for and the quantity allotted are different numbers. Only one of them is paid for.
What it means — and does not
A mandate approval is the permission given to the bank to hold the money. That, or a block confirmation, says money has been set aside and nothing more. It is not a place in a queue, and not a partial allotment. Nor does receiving shares make them profitable. If those 50 shares later trade at ₹90, the holding is worth ₹4,500 against the ₹5,000 they were acquired for. That is a price-only difference of ₹500, before anything else that applies. Subscription figures describe applications received within defined categories and times. A heavily subscribed issue can still list below its offer price. Quotations circulating outside the exchange are not execution prices, and they assure nothing.
What this does not establish
Everything above describes the shape of the process. It stops being a guide the moment a specific issue is in front of the reader. This page states no dates, no , no investor-category rule, no partial-allotment method and no application limit. That is deliberate. Those are set by each issue's own documents, and by rules that change. An example carrying them would be wrong the next time they did, quietly, and with no beside it. SEBI's investor material on applying through ASBA sets out the general mechanism. That is an amount blocked, an allotment, and the release of what was not used. The conditions that actually apply are in the issue's own prospectus and offer terms. What an offer contains also varies. It can be newly issued shares, shares offered for sale by existing holders, or both. That changes where the money goes.
Things to check
6Does the record show a blocked amount, or a completed allotment? They are different states.
Is the quantity being multiplied the quantity applied for, or the quantity allotted?
Is the payment instruction the issue's own verified process, rather than an account named in a message?
Do the price framework, categories and dates come from the current offer documents rather than from an article?
Does the offer create new shares, sell existing ones, or both? And does the reader know which?
Remember: subscription numbers describe applications received, not the value of the business.
Common mistakes
5Reading a mandate approval or a blocked amount as confirmation that shares have been allotted.
Working out what is payable from the quantity applied for instead of the quantity allotted.
Treating oversubscription as a forecast, when it describes demand within defined categories at a point in time.
Taking quotations circulating outside the exchange as prices. No order is executed at them, and they carry no assurance.
Sending an application payment to an individual or an unrelated entity because a message described a special allocation.
A bank shows the application amount blocked for a public issue. What has that established?
- That the shares are allotted and awaiting credit
- Nothing about allotment. Money has been set aside while the application is processed. The quantity allotted decides what is actually payable
- That the application was accepted, so a proportional allotment follows
Show the answer
B. Nothing about allotment. Money has been set aside while the application is processed. The quantity allotted decides what is actually payable
A block is a hold on money, not a purchase. The third option is the tempting one. An accepted application feels like a place in a queue that must pay out something. But the allotted quantity is decided by the issue's own process. It can be none of what was applied for.
Frequently asked
3Does applying guarantee that I get shares?
No. An application is a request. The issue's own process decides the allotted quantity. It can be less than what was applied for, or none at all.
My bank shows the amount blocked — is the allotment done?
No. A block means money has been set aside while the application is processed. Allotment is a separate outcome, published through the issue's own verified channels.
Does heavy subscription mean the listing will be profitable?
No. Subscription counts applications within categories and times. An issue can be heavily subscribed and still list below its offer price or fall afterwards.