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FinMin urges SEBI to do away with 25% margin money in PSU stake auction

17 Dec 2012 Evaluate

In order help generate more demand during the stake sale process as investors won't have to worry about providing funds upfront for making bids, the finance ministry has urged the market regulator Securities and Exchange Board of India (SEBI) to do away with the 25 per cent margin money requirement for institutions bidding during the PSU stake sale through auction route.  As per the existing norms, institutional investors have the option of submitting bids with 25 per cent margin money under the OFS or auction route.

The ministry has also urged the SEBI to extend the time for accepting bids by the stock exchanges to 1730 hours from 1530 hours during the auction process. These steps by the finance ministry will help to generate better response for PSU shares since these are off-market deals and need not be restricted to equity market timings. Trading in equity markets happen between 0900-1530 hours.

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, the government has raised over Rs 6,900 crore. Earlier last week, the government raised Rs 6,000 crore through 10 per cent stake sale in NMDC.

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