The notification to increase the foreign investment cap in telecom from 49 to 74 per cent is expected to take some time with the Cabinet expected to decide on further simplification of rules.
Senior government officials told Business Standard the finance ministry had suggested that the department of telecommunications should go back to the Cabinet to exclude the holdings of public sector banks in the foreign promoter group.
The Cabinet had stipulated in February that the 74 per cent cap would include all direct and indirect investments made by foreign institutional investors, non-resident Indians, foreign currency convertible bonds, depository receipts and convertible preference shares.
The DoT later proposed that bank holding in companies providing telecom services be excluded while calculating the level of foreign investment as many telecom companies had reached the prescribed level.
North Block was, however, of the opinion that since it was difficult to exclude the stake held by banks, it should be restricted to public sector banks where the government holding would always be at least 51 per cent.
The proposal cleared by the Cabinet stipulated that resident Indians should account for a majority of the board positions, including the chairman, managing director and chief executive officer.
Other key positions like chief technical officer and chief financial officer also have to be filled by Indians, the cabinet decided.
The DoT has, however, suggested that the government allow people of Indian origin to be appointed to top management positions. This issue is also expected to be discussed by the Cabinet.
Following the decision in February, some telecom service providers found themselves in a position where key positions were held by non-resident Indians or foreign nationals. They had approached the DoT informally to get the rules changed, the officials said.
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