The Reserve Bank of India (RBI) on August 6 retained Tata Sons Private Limited in the Upper Layer category of non-banking financial companies (NBFCs), stating that the company’s application for de-registration from the NBFC framework is still under review.
The central bank clarified that Tata Sons’ inclusion in the NBFC-UL list does not indicate any decision on its request to exit the regulatory framework.
“Inclusion of Tata Sons Private Limited in the list of NBFC-UL is without prejudice to the outcome of its application for de-registration, which is under examination,” RBI said.
Tata Sons Remains Under Enhanced Regulatory Framework
Under RBI’s scale-based regulatory framework, NBFCs classified under the Upper Layer are subject to stricter regulatory requirements due to their size, complexity and systemic importance.
The Upper Layer category includes NBFCs identified by the RBI based on revised criteria, including an asset threshold of ₹1 lakh crore. The regulator reviews the asset-based criteria for NBFC classification every three years.
RBI said that once an NBFC is classified as NBFC-UL, it remains subject to enhanced regulatory requirements for at least five years, even if it no longer meets the eligibility criteria in subsequent reviews.
The RBI has also adopted an ownership-neutral approach by allowing eligible government-owned NBFCs to be included in the Upper Layer category.
However, such government-owned entities will not be required to list on stock exchanges, unlike other NBFC-UL entities that must complete listing within three years of classification.
Listing Debate Continues At Tata Sons
The RBI’s decision comes amid ongoing discussions around Tata Sons’ regulatory status and potential listing requirements. Tata Sons, the holding company of the Tata Group, had applied for de-registration as an NBFC-CIC after being classified under the Upper Layer category.
The possibility of a public listing has also triggered concerns within Tata Trusts. In June, Tata Trusts Chairman Noel Tata reportedly communicated concerns to the RBI over a possible listing of Tata Sons, arguing that it could affect the long-term structure of the holding company and its philanthropic objectives.
The matter remains under consideration as Tata Sons awaits RBI’s decision on its de-registration request.
