The Tata Group has requested a dispensation from the Reserve Bank of India (RBI) to avoid listing its investment holding arm, Tata Sons, on the stock exchanges.
In its proposal to the central bank, the group stated that Tata Sons did not meet the upper-layer non-banking financing company (NBFC) standards and therefore be excluded from the requirements. According to insiders familiar with the situation, this occurred after the corporation underwent internal reorganization and lowered debt.
The updated RBI regulations required an upper-layer NBFC to list within three years following notice. On September 14, 2023, the regulator notified 15 firms, including Tata Sons, that the holding company must be public by September 2025.
Earlier in March, Tata Sons generated around Rs9,300 crore by selling 23.4 million shares of its IT subsidiary Tata Consultancy Services (TCS) in block sales. According to the reports, a portion of this was utilized to settle debt, although the exact amount repaid is unknown.
Tata Sons has been considering alternatives for shedding the upper-layer NBFC label, including combining a company with itself or decreasing debt to specific levels. Another alternative was to request an extension of the restrictions.
Being classified as an upper-layer NBFC would need a high level of compliance and transparency, including bank license and NBFC laws, as well as disclosures under Core Investment Companies regulations.
The business was also considering acquiring an existing non-financial services company. N Chandrasekaran, chairman of Tata Sons, had previously met with top RBI officials to seek clarification on the matter and to achieve a "solution".
