RBI rejects Tata Sons’ application to surrender NBFC licence, asks for immediate listing

Account subscription benefits alongside Premium Stories, Editorials, Opinions and more. Unlock these with Subscription

As per a 2022 circular, Tata Sons, among other large NBFCs, was asked to get listed by September last year based on RBI’s scale-based regulation. File | Photo Credit: Reuters

The Reserve Bank of India (RBI) has rejected Tata Sons’ application to surrender its Non-Banking Finance Company (NBFC) licence, saying the application ‘cannot be acceded to’.

In a letter written to Tata Sons Private Ltd, the banking sector regulator has asked the holding company of the Tata Group to prepare for an immediate public listing.

As per a 2022 circular, Tata Sons, among other large NBFCs, was asked to get listed by September last year based on RBI’s scale-based regulation. But Tata Sons had applied for de-registration, as it was majority-owned by charitable trusts and was not mobilising public funds and was only a core investment company.

The RBI remained silent for over a year and, in early August this year, released a list of 17 large (upper layer or UL) NBFCs for 2026-27, which included Tata Sons, subjecting them to enhanced regulatory requirements for at least five years and mandatory listing within three years of identification.

“The inclusion of Tata Sons Private Limited in the list of NBFC-UL is without prejudice to the outcome of its application for de-registration, which is under examination,” the RBI had said.

The central bank’s framework categorises NBFCs into Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL) and Top Layer (NBFC-TL) and provides the criteria to identify the NBFCs in the Upper Layer.

The Shapoorji Pallonji Group, which has an 18% stake in Tata Sons, had been demanding a listing to release the capital blocked in the Tata Group holding company. Tata Trusts per se was opposed to listing.

About 66% of Tata Sons is owned by charitable trusts, and several Tata Trusts trustees have reportedly supported it’s listing.

With it’s imminent listing, Tata Sons will be subjected to enhance governance and disclosures.

Recently, there were allegations of governance lapses at Tata Sons, and Tata Sons Chairman N. Chandrasekaran had offered not to seek reappointment causing a leadership vacuum.

Tata Trusts is yet to establish the selection committee for identifying and choosing the new leader.

For Noel Tata, the Tata Trusts Chairman, it will be a Herculean task to effect leadership transition, manage the contradictions and prepare Tata Sons to get listed in a time bound manner.