Abolish 25% margin money in PSU share auction: FinMin to Sebi

The finance ministry has written to market regulator Sebi to do away with the 25% margin money requirement for institutions bidding during the PSU stake sale through auction route.

The Ministry, according to official sources, has also urged the Securities and Exchange Board of India (Sebi) to extend the time for accepting bids by the stock exchanges to 1730 hrs from 1530 hrs during the auction process.

These suggestions, they added, will help generate more demand during the stake sale process as investors won't have to worry about providing funds upfront for making bids.

"We have written to Sebi to abolish margin money, at least for institutional investors. It will help in generating better response for PSU shares," the official said, adding that as these are off-market deals they need not be restricted to equity market timings. Trading in equity markets happen between 0900-1530 hrs.

"We have asked them to extend the time for share sale to 1730 hrs. Also, we have suggested that the OFS (offer for sale) process can begin around 1200 hrs, instead of 0900 hrs, as this is an off-market deal" he added.

As per the existing norms, institutional investors have the option of submitting bids with 25% margin money under the OFS or auction route.

Last week, the government raised Rs 6,000 crore through 10% stake sale in NMDC. The issue got over-subscribed 1.73 times, with majority of the bids coming in from institutional investors.

The OFS of Hindustan Copper in October had generated demands worth 1.4 times the shares on offer, while ONGC share sale in March barely managed to get fully subscribed.

In the current fiscal, the government has fixed a target of raising Rs 30,000 crore from stake sale in PSUs. So far this fiscal, it has raised over Rs 6,900 crore.

EDITORIAL OF THE DAY

  • It is for the market, not the government to decide the fares of private air carriers

    In a country where substantial lip service is paid to the glories of a free economy and laissez faire, there is enough evidence to suggest that in rea

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Urs Schoettli

New masters of the Financial Times

A few days ago, Japan’s leading financial daily Nihon Keizai ...

Anuja Sharma

Focus mindfully to get the result

Have you ever tried to light a fire using the ...

Gautam Gupta

Our fashion schools need to notch it up

“Creativity is the key to success and primary education is ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture