The Securities and Exchange Board of India has proposed the process of alternative mode of payment for public offers that was cleared by its board last week.

The Sebi intends to introduce the Application Supported by Blocked Amount, which will require retail investors bidding at a cut-off price, to apply through self-certified syndicate banks in which they have accounts.

The ASBA process will require SCSBs to accept applications from investors, block the funds to the extent of the bid payment amount and then upload the details in the electronic bidding system. Once the basis of allotment is finalised, the amount required by the issuer will be released and the rest will be unblocked by the SCSB.

The capital market regulator has invited comments on the ASBA process before June 6, 2008. The new payment system will co-exist with the present procedure.

The new system can be used only by retail investors with a bank account with SCSBs and those who are bidding at the cut-off with only one option. Also, those using the new mechanism will not be able to revise their bids.

Banks will be responsible to resolve investor grievances. In cases of failure of an issue, the bank will have to immediately release the block on receipt of request from the registrar. Registrars are required to maintain the electronic records relating to the bids received from the SCSB.

Book running lead managers will have to intimate in writing the issue opening date to SCSBs. In case the company has withdrawn the issue, the lead managers need to inform the SCSB of the developments and will also be responsible for providing investor-wise details on allotment and non-allotment to each bank.