Tata Sons faces continued listing uncertainty after RBI classification

The Reserve Bank of India on Thursday kept Tata Sons under enhanced regulatory supervision but said that would not affect the holding company's pending application to surrender its non-banking finance licence, leaving uncertainty over whether it will eventually have to list its shares.

Tata Sons, the principal investment holding company of the $400-billion Tata Group, was first classified as an upper-layer non-banking financial company (NBFC) in ‌2022. Under RBI ⁠rules, ⁠such entities are required to list within three years, although the regulator did not clarify whether that requirement applies while Tata Sons' deregistration request remains under review.

To avoid a listing, Tata Sons repaid its debt and applied ​about two years ago to surrender its NBFC licence. The application is still being considered by the central bank.


A person familiar with the RBI's thinking said the regulator is unlikely to ​require Tata Sons to list while the application remains ⁠pending, even though ‌the three-year timeline has elapsed.

"Technically if you see Tata Sons has ​to follow all ​the regulation and if you look at even the listing, RBI will ⁠consider it as overdue. Since the application is yet to ​be disposed of, RBI will not push them to enforce these ​regulations," said the source familiar with the matter

The RBI and Tata Sons did not immediately respond to a Reuters request for comment. RBI Governor Sanjay Malhotra said on Wednesday that Tata Sons continued to be classified as an upper-layer NBFC because the framework governing such entities was "principle-based".

Upper-layer NBFCs are considered large and systemically important financial institutions and are subject to enhanced regulatory ‌oversight. Tata Sons remains in the category because its asset size exceeds the stipulated 10 trillion rupees ($105 billion) threshold.

The outcome is significant because the Tata Trusts own about 66% of Tata Sons. ⁠A public listing could affect funding for the trusts' philanthropic activities and its investments in unlisted businesses, and alter the ownership structure of one of India's largest conglomerates.

Pressure for a listing ​has also come from Tata Sons' second-largest shareholder, the Shapoorji Pallonji Group, which wants to monetise or exit its holding as it seeks to reduce debt estimated at 5.5 trillion rupees to 6 trillion rupees.

Tata Sons owns Air India, Tata Digital and Tata Electronics, alongside stakes in listed companies including Tata Consultancy Services and Tata Steel.