The stake sale, valued at about $3.2 billion at the current Coal India stock price, is part of New Delhi's aim to raise Ra 6,9500 crore or Rs 695 billion ($10.52 billion) by March by selling minority stakes in government-owned companies.
The government has raised 127 billion rupees ($1.92 billion), or less than 20 per cent of its target, so far this year.
It owns 79.65 per cent of Coal India.
Other investment banks who have submitted bids for the offering are Axis Capital, Elara Capital, Edelweiss, Kotak Investment Banking and JM Financial, IFR, a Thomson Reuters publication, said.
The Department of Disinvestment, which oversees stake sales in state firms, will decide later this week on the timeline for hiring five banks to manage the share sale, the person told IFR.
The department and all eight banks did not immediately respond request for comment.
The deadline for submitting bids was extended thrice as global investment banks came under pressure from environmental groups to steer clear of the process, sources told Reuters last month. The divestment department has not given a reason for the extensions.
Coal fuels 60 per cent of India's power production, but Coal India is a sprawling, inefficient behemoth, consistently missing production targets and frequently battling accusations over worker safety and environmental damage. Coal India Chairman Sutirtha Bhattacharya did not respond to an email requesting comment last month.
Indian banks take part in all large stake sales, but foreign banks, with their vast offshore networks and institutional client base, are crucial for successfully raising large capital, particularly abroad.
Global banks such as Bank of America Merrill Lynch, Credit Suisse Group, Deutsche Bank, Goldman Sachs, Citigroup and Morgan Stanley worked on previous Coal India share sales.
A total of 18 banks had submitted bids for managing a 10-per cent stake sale in Coal India in January this year, IFR reported.
In contrast, HSBC is the only foreign bank to bid for the bookrunner's role in the latest round.
Many foreign banks operating in India are also under pressure to be more selective when it comes to roles that are heavy on staff but light on returns. Most government equity deals pay a fee of just 1 rupee ($0.015).
'India cannot survive without coal'
'Amid global turmoil, India looks very good'