Why does margin on F&O transactions increase abruptly closer to expiry?

A SEBI circular in October 2019 made it mandatory for all Stock F&O contracts to be physically settled. This means, if a trader holds stock futures or in-the-money stock options at the close of expiry, they may have to give or take delivery of the entire contract value. This increases the risk for the client and the brokerage firm, as the client may not have enough cash to take delivery or stock to give delivery. To mitigate this risk, higher margins are required as the expiry date approaches.