RBI governor backs Tata Sons classification, says large NBFCs must follow listing norms

New Delhi: RBI Governor Sanjay Malhotra on Friday justified the classification of Tata Sons as an upper-layer NBFC, saying that any large NBFCs or core investment companies that handle public funds or leverage a group's balance sheet need to be registered with the central bank and follow the requisite listing norms.

Large NBFCs and core investment companies (CIC) like Tata Sons and others are required to be registered with the RBI because of the systemic risks, because they sit on top of group companies where they leverage funds and they use the balance sheets of the group companies to return those funds, he said at the NDTV World Summit.

"So, the funds of the public, whether it is through corporate bonds, banks and other means, that is at risk...so, it is for these reasons that these CICs, or NBFCs, are required to be registered," he said.


CICs that do not have direct or indirect access to public funds are exempt from the registration requirement, he said.

"As long as it is an NBFC within our definition, it is a CIC, it has access to funds, direct or indirect, it's required to be registered, and if it is in the upper layer, then it is required to list," he said.

Last month, the RBI rejected Tata Sons' application to surrender its non-banking finance company (NBFC) licence, which will force a public listing of the holding company of the salt-to-software conglomerate Tata Group.

This makes a public listing of Tata Sons imminent as it qualifies as an upper layer NBFC, which must mandatorily list on the stock exchanges.

Tata Sons was placed in the upper layer in September 2022. It had applied in March 2024 to surrender its registration, and had repaid its debt in an effort to qualify for deregistration.

The Tata Sons board has since moved ahead with steps linked to a possible public listing, while saying it will examine other options amid a deepening row within the conglomerate.

Malhotra reaffirmed the central bank's primary objective is maintaining price stability with inflation targeting while supporting long-term economic growth.

India's strong macroeconomic fundamentals continue to support economic activity, with high-frequency indicators pointing to resilient growth across sectors, he said.

Inflation targeting remains a priority, along with growth, he said, adding that the RBI is committed to maintaining price stability while supporting the economy.

He pointed to indicators such as cement and steel sales, credit growth, tax collections and automobile sales as evidence that economic momentum remains intact.

According to the RBI governor, growth is broad-based, with activity holding up across several segments of the economy.

The governor also said inflation remains within the RBI's tolerance band, although supply-side pressures, particularly from food and fuel, continue to pose challenges to the inflation outlook.

He referred to an average inflation projection of 5.1 per cent for the current year, attributing the outlook to supply-side factors.

On the rupee, Malhotra said the central bank is not targeting any particular exchange-rate level.

Instead, he said, the RBI's focus is on ensuring orderly conditions in the foreign exchange market and managing volatility rather than defending a specific currency value.