RBI looks at Tata Sons plea to drop NBFC tag

MUMBAI: RBI has stated that Tata Sons’ application for de-registration as an NBFC is under examination. This is the first time the central bank has confirmed the development, which aims to avoid a listing of the holding company for the Tata Group.
The disclosure was made by RBI while releasing the list of non-banking finance companies that fall in the ‘upper’ layer.

While the companies on the list have not changed, RBI noted that “the inclusion of Tata Sons in the list of NBFC-UL is without prejudice to the outcome of its application for de-registration, which is under examination.”
However, RBI clarified that under the framework, once an NBFC is classified as an NBFC-UL, it will be subject to enhanced regulatory requirements for at least five years from its classification in the layer, even if it drops out in subsequent years.
Tata Sons has been reducing its debt to declassify itself as an NBFC-core investment company and avoid being included in the list of upper-layer NBFCs. According to RBI regulations, if Tata Sons continues to be an upper-layer NBFC, it must get listed by Sept 2025. Reports suggest that, given the value of its holdings, Tata Sons would need to sell at least Rs 50,000-crore worth of equity to dilute a 5% stake.
In 2024, Tata Sons significantly reduced its debt by selling shares of TCS and used the proceeds to pay off loans. Despite qualifying for identification as an NBFC-UL under the scoring methodology, Piramal Enterprises is not being included in the current review of the NBFC-UL list due to ongoing reorganisation within the business group. Piramal Enterprises has announced plans to merge with its subsidiary, Piramal Capital & Housing Finance, which is included in the upper-layer list.