The less-than-expected retail response to the ONGC issue is being attributed to the low commission of 6 paise offered to brokers for every Rs 100 worth shares sold compared with 65 paise in case of Maruti Udyog.

According to brokers, the merchant bankers offered them a brokerage of 0.06 per cent for the ONGC issue, which was not quite an incentive to aggressively market the issue.

The brokerage for the other issues of residual equity sale by the government was also quite low at 5-25 paise.

In the recent public offer of Bank of Maharashtra, the brokerage was as high as 1 per cent or Re 1 per Rs 100, they said. Further, for better performers, it was pegged even higher at 1.25 per cent.

A prominent Delhi-based broker said, the low brokerage left even the sub-brokers unenthused. Normally, the brokers parted with 75-80 per cent of their commission to the sub-brokers.

Hence, besides the metros, the brokers were unwilling to push the offer in other regions since it did not cover even their mailing costs.

"The issue could have been subscribed at least three times more than the current level if the brokerage was comparable to that offered during the Maruti divestment," another broker said.

When contacted, a book runner to the ONGC issue said, "This is not the causative factor. The ONGC issue has attracted retail investment of over Rs 2,000 crore (Rs 20 billion). This shows that it has received a huge response."

The retail investors, who were offered 25 per cent of the issue, subscribed only 17.8 per cent.

The brokers said that in the case of IPCL and CMC, the brokerage was 20 paise, while it was 25 paise for the Gail and Dredging Corporation of India offers. For IBP, it was 15 paise, still higher than 6 paise for ONGC.

The brokers said that even for tax saving instruments, they received a commission of Re 1 per Rs 100. Besides pricing, the timing of the public offers -- February and March -- resulted in low retail investor interest.

"The tax liability of salaried individuals is generally high during the last two months of the fiscal. They tend to invest more in tax saving bonds and similar instruments," said a chartered accountant and financial advisor.