RBI Rejects Tata Sons Bid To Exit Upper-Layer NBFC, Directs Firm To Go Public

Last Updated:September 12, 2026, 9:57 PM IST

The RBI first classified Tata Sons as an Upper Layer NBFC in September 2022, giving such entities three years to list.

A man stands in front of the Reserve Bank of India (RBI) logo inside its headquarters in Mumbai, India. (IMAGE: REUTERS)

The Reserve Bank of India (RBI) on Saturday rejected Tata Sons’ application to surrender its registration as a core investment company, effectively closing the holding company’s route to avoid a mandatory stock-market listing, sources said on Saturday.

The decision was conveyed in a letter received by Tata Sons’ company secretary and chief financial officer on Saturday, the sources said. The company had applied in March 2024 to deregister as a non-banking financial company (NBFC).

With its application rejected, Tata Sons will continue to be classified as an Upper Layer NBFC, a category that comes with enhanced regulatory requirements, including a mandatory listing. The RBI first classified Tata Sons as an Upper Layer NBFC in September 2022, giving such entities three years to list.

Tata Sons had sought to exit the NBFC framework before the original September 30, 2025 deadline. The company repaid more than Rs 21,000 crore of debt in 2024 and subsequently sought to surrender its registration, which would have allowed it to operate as a privately held holding company outside the NBFC framework.

The RBI kept the application pending through 2025 while continuing to include Tata Sons in its Upper Layer NBFC lists.

The regulatory route sought by Tata Sons has now effectively been closed. Under revised RBI norms that took effect in June 2026, any NBFC with assets of Rs 1 lakh crore or more qualifies for the Upper Layer. Tata Sons’ standalone assets were reported at more than Rs 2 lakh crore as of March 2026.

A public listing would mark a significant change for the holding company of the Tata Group, which owns stakes across businesses including information technology, automobiles, steel, consumer products, aviation, hospitality and financial services.

Listing would also subject Tata Sons to greater public scrutiny, with regular disclosures on its finances, investments and capital allocation and greater visibility into the value of its holdings.

The issue dates back to October 2021, when the RBI introduced its scale-based regulatory framework for NBFCs, dividing them into base, middle, upper and top layers with progressively stricter oversight.

In September 2022, Tata Sons was placed in the Upper Layer alongside companies including Bajaj Finance and Shriram Finance. Tata Sons subsequently pushed to escape the framework altogether by surrendering its Core Investment Company registration.

The dispute has also exposed differences among Tata Sons’ shareholders over the prospect of a listing. Tata Trusts, chaired by Noel Tata and holding more than 65% of Tata Sons, has opposed a listing, while the Shapoorji Pallonji Group, which owns roughly 18%, has argued that a public listing would allow shareholders to realise value from their holdings.

The development also comes ahead of a leadership transition at Tata Sons. Chairman N Chandrasekaran has said he will not seek another term when his tenure ends in February 2027 after nearly a decade at the helm.

The RBI’s decision does not itself amount to an IPO announcement. The timing, structure and size of any eventual offering remain undecided. Tata Sons will now have to work towards complying with the listing requirement as an Upper Layer NBFC.

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Why did the RBI reject Tata Sons’ application to surrender its NBFC registration?

The RBI rejected Tata Sons’ application to surrender its registration as a core investment company to prevent the holding company from avoiding a mandatory stock-market listing. Under revised RBI norms, any NBFC with assets of Rs 1 lakh crore or more qualifies for the Upper Layer, which mandates a public listing. Tata Sons’ standalone assets were reported at more than Rs 2 lakh crore as of March 2026, keeping it firmly within this regulatory framework.

How do Tata Sons’ major shareholders differ on the prospect of a public listing?

Tata Sons’ shareholders are divided over the listing. Tata Trusts, which holds more than 65% of Tata Sons and is chaired by Noel Tata, has opposed a public listing. Conversely, the Shapoorji Pallonji Group, which owns approximately 18% of the company, has argued in favor of a listing, stating it would allow shareholders to realize value from their holdings.

What steps did Tata Sons take in 2024 to try to avoid the mandatory listing requirement?

In March 2024, Tata Sons applied to deregister as a non-banking financial company (NBFC) by surrendering its Core Investment Company registration. To facilitate this exit and operate as a privately held holding company outside the NBFC framework, the company repaid more than Rs 21,000 crore (specifically Rs 21,813 crore) of debt in 2024 to turn net cash positive.

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Shankhyaneel Sarkar

Shankhyaneel Sarkar is a chief sub editor at News18. He covers international affairs, where he focuses on breaking news to in-depth analyses. He has over seven years of experience during which he has …Read More

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