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.