Tata Sons’ listing hangs in balance after RBI diktat for upper-layer NBFCs

The Reserve Bank of India’s (RBI’s) second amended direction on upper-layer NBFCs issued on Wednesday, has sparked hopes that Tata Sons could get a reprieve from its obligation to list on the bourses, but the jury is still out on whether it will translate into genuine respite for the Tata group’s holding company.

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In its latest direction, the central bank has dropped a provision defining the “indirect receipt of public funds”. That clause, included in an amendment to the directions issued this April, had been viewed as a key hurdle for business houses seeking to deregister as core investment companies (CICs). 

In the April amendment, the central bank had said indirect receipt of public funds means funds received not directly but through associates and group entities which have access to public funds. The April circular was aimed at tier-1 NBFCs. Tier-1 NBFCs are those that do not have access to public funds, and have no customer interface.

“The issue has to be broken down into three parts. First, the question is whether Tata Sons is a core investment company (CIC). The upper-layer framework applies to CICs. The debate is not really about the ₹1 lakh crore asset threshold; it is about whether RBI considers Tata Sons to be a CIC. The April draft had tried to define ‘indirect receipt of public funds’ by saying that funds received through associates or group entities that have access to public funds would also qualify. This has now been removed by RBI,” said Abizer Diwanji, founder at NeoStrat Advisors LLP.

“The broader issue of what constitutes indirect public funds, however, remains. As things stand, RBI’s list of upper-layer NBFCs includes Tata Sons. That fundamentally means RBI currently considers it to be a CIC with access to public funds. If Tata Sons believes it no longer falls within that definition because it has repaid its public liabilities, it will have to approach RBI and argue that it should no longer be treated as a CIC. If RBI accepts that argument, Tata Sons’ name will be removed from the upper-layer list. If it is not removed, then there is no escape — it continues to be treated as a CIC, and the listing requirement follows automatically,” Diwanji said.

The moot question is not the asset size, but whether the RBI continues to classify Tata Sons as a CIC based on indirect access to public funds, he reckoned. Tata Sons was classified as an upper-layer NBFC in 2022 under the RBI’s scale-based regulation.

At the same time, Wednesday’s direction accepted the April proposal that asset size will remain a key determinant for being considered as an upper layer NBFCs. In April, RBI proposed that the Upper Layer should consist of NBFCs having asset size of ₹1 trillion and above, as per the latest audited balance sheet for the financial year.

Separately, on 10 March, the RBI updated one of its directions on CICs, stating that such firms with an asset size of ₹100 crore and above, and not accessing public funds, are not required to register with the regulator under Section 45IA of the RBI Act, 1934, and will be termed as ‘Unregistered CICs’. Tata Sons does not have access to public funds.

In 2024, Tata Sons had approached the RBI seeking to surrender its core investment company (CIC) licence after turning debt-free so that it could remain a private unlisted entity. The application has been under review past its listing deadline of September 30, 2025.