The DoT is not very keen on accepting bank guarantees from any financial institution other than scheduled banks which are recognised by the Reserve Bank of India.

According to a DoT official: "The financial institutions do not come under the purview of the RBI. Hence, in case of disputes, there is no option but to take a legal recourse. However, with scheduled banks, one plus point is that there are ombudsmen who can look into the matter."

This apparently is proving to be a stumbling block for most of the corporates who have applied for licences for various circles. Said a senior official from a leading telecom major: "We are planning to approach the government through associations to reconsider. The kind of bank guarantees and the time frames that we are looking at for basic as well as long distance projects, we would definitely be more comfortable with the financial institutions."

The perception being that scheduled banks would be disinclined to provide guarantees for long term telecom projects. "The maximum that the scheduled banks will have the ability to come up with would be something like three years. The financial institutions, on the other hand, have been working with us on telecom projects. Therefore, due to the rate of interest and other facilities we prefer working with FIs," adds another industry source.