Margin for overnight spreads for stocks

Hello,

Since stock options are pysically settled, if I apply a bear call spread for say bajajfinance, does margin increase in the last week for the short option as physical settlement nears ?

Yes, even if your position is hedged margin requirement for Short position will increase to twice of SPAN + Exposure margin on last two days of expiry, also for ITM Long Option positions, exchange charges Physical Delivery margin in phased manner from prior Friday of expiry week. You can read this to learn more.