The government on Thursday decided to sell 23.11 million shares of Maruti Udyog [Get Quote] Limited, representing 8 per cent of the company's paid-up capital, to eight state-owned banks and financial institutions at an average price of Rs 678.24 per share.

The Centre will generate Rs 1,567.60 crore through this transaction. The price was at a premium to the floor price of Rs 620 per share, said Finance Minister P Chidambaram after the meeting of an empowered group of ministers.

Maruti scrips closed 1.8 per cent higher at Rs 663.05 on the Bombay Stock Exchange. The average price was 22.8 per cent higher than the six-month average and 12.3 per cent premium to the three-month average.

The decision to sell the shares was taken by an empowered group of ministers comprising Chidambaram, Heavy Industries Minister Santosh Mohan Deb and Deputy Chairman Planning Commission Montek Singh Ahluwalia.

The finance minister also said that based on the Heavy Industries ministry's recommendations, the government will sell its remaining 10 per cent stake in Maruti at a suitable time and in accordance with the established procedure. He also said that all 3,609 employees of the company would be entitled to 20 shares at a price of Rs 660 per share.

The bids by 36 state-owned banks, financial institutions and insurance companies ranged between Rs 620 and Rs 675 per share.

The eight players, which would be allotted the 23.11 million shares, included Small Industries Development Bank [Get Quote] of India, which submitted the highest bid at Rs 725 per share, Corporation Bank [Get Quote] (Rs 690), Life Insurance Corporation (Rs 682), Exim Bank (680), Indian Bank [Get Quote] (Rs 670), Union Bank of India [Get Quote] (Rs 665), State Bank of [Get Quote] India [Get Quote] (Rs 660) and State Bank of Patiala (Rs 600).

LIC [Get Quote] will get the maximum number of shares (16.8 million shares) followed by SBI (3.9 million) in the multiple price bidding system adopted by the government for the first time. The successful bidders face a lock-in period of six months.

Asked if the proceeds from the sale of the shares would be transferred to the national investment fund, Chidambaram said, "It is for the Cabinet to decide." The government has decided to transfer all the proceeds from disinvestment to the national investment fund and use the earnings to meet its social sector spending requirements and revitalising public sector companies.