Tata Group Approaches RBI To Avoid Listing Tata Sons As NBFC: Report

The firm reportedly argued that Tata Sons doesn’t come under the purview of the upper-layer non-banking finance company (NBFC) rules and therefore, should be exempted from listing publicly

If Tata Sons is categorised as an upper-layer NBFC, it would have to adhere to a high level of compliances and disclosures, such as banking licence, NBFC norms, disclosures under Core Investment Companies regulations, etc.

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The Tata Group has approached the Reserve Bank of India (RBI) seeking an exemption from listing its investment firm, Tata Sons, on the exchanges. The conglomerate has reportedly requested the banking regulator to help it avoid the public listing of its investment holding business, Tata Sons, in the stock market. 

The Group has made the argument that Tata Sons doesn’t come under the purview of the upper-layer non-banking finance company (NBFC) rules and therefore, should be allowed to waiver from listing publicly, reported the Financial Express, citing sources aware of the matter. 

Notably, the development comes after the firm conducted some restructuring in the organisation and managed to lower its debt, the report said. 

The latest provisions of the RBI state that it is compulsory for an upper-layer NBFC to list on the bourses within a period of three years from the notification. Earlier in September 2023, the central bank issued a notification to 15 firms, including Tata Sons, as part of this category. Therefore, these companies need to be publicly listed on the bourses by September 2025. 

As part of its restructuring, Tata Sons raised about R 9,300 crore in March 2024, by selling 23.4 million shares in its IT subsidiary, Tata Consultancy Services (TCS), via block deals. A part of these funds was utilised to repay debt, the report said citing sources, however, it failed to disclose the amount of debt repaid. 

The investment firm has been looking into options to get rid of the upper-layer NFBC tag, such as initiating the merger of a subsidiary with itself, lowering debt to a certain amount, or request for extension from provisions.

If Tata Sons is categorised as an upper-layer NBFC, it would have to adhere to a high level of compliances and disclosures, such as banking licence, NBFC norms, disclosures under Core Investment Companies regulations, etc. The firm has also been considering a merger with an operating non-financial services firm to avoid the ordeal.

Notably, N Chandrasekaran, Chairman, Tata Sons, also met with the regulator’s officials earlier to get more clarity on the matter and understand the solutions for the same.