Reliance is taking the step to help limit the fallout from the listing on India's battered stock market.

People familiar with the offering said the company wanted to return the money by February 1, about a week ahead of the expected schedule, to help restore liquidity to a market that has been one of the worst performing in Asia in the past 10 days.

"This brings a lot of money back into the hands of investors at a time when they could use it," said a person familiar with the deal.

The $3bn IPO, India's largest, was launched on January 15 before the recent market turmoil.

It attracted recordbreaking demand and investors made offers for 73 times the shares available - equal to a total of $190bn.

But brokers said the IPO had contributed to a liquidity crunch in India's market by sucking money out of trading just as the global stock turmoil struck this month. India's market is down about 14 per cent from its recent highs of more than 21,000 points.

Under Indian rules, IPO allocations are awarded on a pro rata basis. This means that the bigger the allocation an investor desires, the bigger the bid that investor must make.

Investors are then re-quired to put down a deposit worth the equivalent of between 10 and 25 per cent of the amount they bid. This money is locked up in the bank, usually for three weeks, while bankers slice up the IPO allocations among the bidders.

Reliance now wants to return these deposits, less the payments for their share allocations, to investors.

Brokers argue that with the deposit money sitting in the bank, retail investors were unable to meet margin calls when India's stock market fell during the past 10 days, exaggerating its falls.

Foreign investors were also deprived of cash to bottom-fish in the Indian market because of the huge sums they had tied up in the offering.

Reliance Power last week wrote to the regulator, the Securities and Exchange Board of India, asking it to be allowed to release the institutional money - which accounts for 70 per cent of the offering - earlier than other investors.

It is now understood to be seeking to release funds to all investors by the February 1 deadline. Reliance declined to comment. The board declined to comment.