According to sources familiar with the developments, the securities market regulator has already written to the finance ministry proposing the minimum public shareholding (MPS) be raised from 10 per cent to 25 per cent, to level the playing field. The regulator is likely to set a three-year timeframe for PSUs to meet the 25 per cent MPS requirement to avoid crowding out.
"The matter has been discussed with finance ministry officials and will be presented to the new finance minister shortly," said a person with direct knowledge of the development.
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Some of the other major companies where the Centre holds more than 75 per cent stake are NMDC, NHPC, SAIL and MMTC.
Sources indicated the final discussion on the matter could take time, as the finance ministry would consult other ministries before accepting Sebi's proposal.
The deadline for 25 per cent MPS requirement for private companies had ended in June last year, while the deadline for the government to pare its holding to at least 90 per cent in PSUs was August 2013.
The public-float requirement had come into play in June 2010, after Sebi amended the Securities Contract (Regulations) Act.
The regulator had taken action against more than 100 private companies, their promoters and directors for failing to achieve the 25 per cent public float within the stipulated period. Almost all PSUs had managed to meet the 10 per cent public-float requirement before their August deadline. However, Sebi had allowed the government to transfer its holding in excess of 90 per cent in 'sick PSUs' to a special fund.
The rationale for having at least 25 per cent public float is to curb stock price manipulation and to promote wider participation from investors.

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