The government has zeroed in on a list of PSUs which include Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, Videsh Sanchar Nigam Ltd, Mahanagar Telephone Nigam Ltd, and Gas Authority of India Ltd.

"The picture, however, is not yet clear as to what extent the government wants to divest its stake in each of these PSUs. Once the government makes up its mind, it may not be a problem in raising money through private placements in banks and institutions," sources said. Banks and institutions will not buy these shares for the warehousing purpose. "We will own these shares. It will be up to individual banks and institutionsto sell it in the market to book capital gains," the sources said.

Two other ways being explored to make the disinvestment programme a success are buyback and floating of global depository receipts (GDRs). The Centre has been able to raise only Rs 225 crore from the sale of Concor equity in the current fiscal.

"The ball is in the government's court. It must decide on the quantum of divestment first. Once this is done, raising money will not be a problem as banks and institutions have enough liquidity to support the programme," the sources said.

Banks and institutions expect bulk discounts on the PSU shares. "We are looking for an `appropriate' pricing which is naturally below the market price. If the government wants instant liquidity, it will have to give some discount on the pricing of the shares," another banker said under condition of anonymity.

Finance secretary Vijay Kelkar discussed the issue threadbare at a meeting on Wednesday with the Industrial Development Bank of India chairman GP Gupta,Unit Trust of India chief PS Subramanyam and former State Bank of India chairman MS Verma.