Hit by Monday Blues, the Department of Disinvestment now wants flexibility in deciding the day for stake dilution through offer-for-sale.
The Department has taken up the issue with capital market regulator SEBI and the Capital Markets Division of the Finance Ministry.
The trigger for this demand is a June move by SEBI to reduce the notice period for an offer-for-sale to two banking days.
PSUs would announce the share-sale plan on a Friday and schedule the offer for the ensuing Monday.
According to a senior government official, “Stocks are often hammered in the mandated two-day notice period. Further, Monday has become bad for the market, with most crashes happening that day.”
The Department of Disinvestment got a taste of this during its August 24 10 per cent stake dilution in oil mammoth Indian Oil Corporation.
The market tanked, with the BSE losing over 1,600 points due to external factors; 86 per cent of IndianOil shares on offer were finally picked by state-owned Life Insurance Corporation of India.
Now, the Department wants a notice period of just one day so that speculators do not get much time to beat down a stock, another government official told BusinessLine .
It also wants the flexibility to set the date/day.
The Finance Ministry is examining these proposals before taking them up with SEBI.
Additionally, to boost participation of retail investors, the Department of Disinvestment is seeking tax incentives, and easier KYC norms, and simplifying demat account opening.
“There has to be more participation of domestic investors; we must not depend on foreign institutional investors. There is over ₹75,000 crore in postal deposits — at least a portion of such funds can get invested in PSU stake sales,” said the official.
The Finance Ministry’s move comes in the face of the ₹41,000-crore mop-up target from minority stake sales in PSUs this fiscal.
Till now, it has raised ₹12,600 crore from disinvestment in four PSUs including IOC, Dredging Corporation of India Ltd, Power Finance Corporation and Rural Electrification Corporation.