RBI tweak could hand Tata Sons a listing reprieve, but uncertainty persists

The Reserve Bank of India's (RBI's) final guidelines on upper-layer NBFCs issued late Wednesday have rekindled hopes that Tata Sons could get a reprieve from its listing obligations after the central bank dropped a provision defining the "indirect receipt of public funds". The clause, included in the April draft, had been viewed as a key hurdle for business houses seeking to deregister as core investment companies (CICs).

Even so, Tata Sons would continue to qualify as an upper-layer NBFC because of its asset size, leaving uncertainty over whether the regulatory changes are sufficient to exempt it from mandatory listing.

In April draft, 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 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 Rs 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. That is why RBI has removed that clarification in the final guidelines”, said an industry insider, on the condition of anonymity.

“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”, the person quoted above said, adding that the moot question is not the asset size, it whether RBI continues to classify Tata Sons as a CIC based on indirect access to public funds.

Tata Sons was classified as an upper-layer NBFC in 2022 under the RBI’s scale-based regulation.

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 the listing deadline of September 30, 2025.

Currently 15 NBFC are classified as upper layer NBFCs. These NBFCs are Bajaj Finance, Shriram Finance, L&T Finance, Tata Capital, LIC Housing Finance, Cholamandalam Investment & Finance, Mahindra & Mahindra Financial Services, Aditya Birla Finance, Piramal Capital & Housing Finance, Muthoot Finance, HDB Financial Services, Sammaan Capital, Bajaj Housing Finance, PNB Housing Finance and Tata Sons.