Proxy advisory firm InGovern Research Services said on Friday that the Reserve Bank of India (RBI) should reject Tata Sons’ application to give up its registration as a core investment company. It said the regulatory landscape had shifted significantly, and there was no remaining legal basis to provide an exemption to an entity of this magnitude.
“Based on an exhaustive analysis of the RBI’s latest directives, specifically the April 2026 amendment directions, the 10 April classification list, and the critical clarifications issued on 29 April, the Tata Sons application is ‘dead on arrival’,” InGovern said in a note.
Mint reported on Friday that a clarification by the central bank had undercut Tata Sons’ attempt to distance itself from public funds, potentially retaining it in the upper layer of non-bank financial companies (NBFCs), a category that entails tighter regulation and a mandatory listing requirement. It complicates matters for the holding company of the Tata group, which has been trying to stay private, especially since the RBI introduced scale-based supervision of non-bank lenders.
In its clarification, the RBI said due to the use of leverage, multiple layers, and the fungibility of money, it was difficult to establish with reasonable assurance whether the equity infusion by group entities was from their own funds. Tata Sons had total assets of ₹1.75 trillion on a standalone basis as of 31 March 2025. Experts said this meant Tata Sons, in which other listed Tata group companies have a stake, would be deemed to have indirect access to public funds and therefore ineligible to surrender the licence.
Mandatory IPO
InGovern said the regulator should issue a clear directive to Tata Sons to begin the listing process as an upper-layer NBFC in accordance with its latest master directions. It added that transitioning to a listed entity would trigger the Securities and Exchange Board of India’s (Sebi’s) disclosure norms. For a holding company managing ₹1.75 trillion in assets—including giants such as TCS, Tata Motors, and Tata Power—these mandated disclosures are vital for the transparent governance of related-party transactions.
According to the note, the RBI’s cancellations of NBFC licences of companies such as Piramal Enterprises in December 2025 and Tata Motors Finance in October 2025 show that the regulator only accepts surrenders in cases of corporate dissolution or a merger into a compliant, listed framework. “Tata Sons is attempting a 'naked surrender'—seeking to keep its structure intact while shedding its oversight. This is procedurally inconsistent with the RBI’s handling of every other major upper-layer NBFC in the 2025-2026 cycle,” it said.
It said a legal analysis of the 2026 amendments confirmed that the RBI had purposefully narrowed the exemptions window to prevent the misuse of corporate structure for regulatory arbitrage. “By creating a distinct category for registration, the RBI has signalled that any holding company of a conglomerate with significant public-interest assets is, by default, a regulated entity. Allowing a ‘legacy’ application to override these current-day standards would fundamentally breach the principle of competitive neutrality,” it said.
In 2022, RBI had released a list of upper-layer non-banks and said they had three years to get listed. Many from that list, such as Tata Capital and HDB Financial Services, were listed in time. Tata Sons remains the only company on that list to remain private.
Meanwhile, Shapoorji Pallonji Group, Tata Sons’ largest minority shareholder, is pushing for a listing of the firm In search for liquidity. The SP Group owns 18.38% in Tata Sons, nine Tata Group firms own 12.86%, and seven individuals own the remaining 2.87%.
