Tata Sons must list if it remains upper-layer NBFC, says RBI Governor

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday said non-banking financial companies (NBFCs) classified in the regulator's upper layer are required to list on stock exchanges, outlining the regulatory position amid the ongoing dispute over whether Tata Sons must launch an initial public offering (IPO).

Speaking at the NDTV World Summit 2026 in New Delhi, Malhotra avoided giving a direct company-specific response but explained the conditions under which a core investment company (CIC) must register with the central bank and comply with listing requirements.

"As long as it's an NBFC within our definition, it's a CIC, it has access to funds, direct or indirect, it's required to be registered. And if it is in the upper layer, then it is required to list," Malhotra said when asked whether restructuring a company to avoid mandatory listing would be acceptable.

His remarks come amid differences within the Tata Group over the proposed listing of Tata Sons, the holding company of the conglomerate.

𝗥𝗕𝗜 𝗲𝘅𝗽𝗹𝗮𝗶𝗻𝘀 𝗹𝗶𝘀𝘁𝗶𝗻𝗴 𝗿𝘂𝗹𝗲𝘀

Malhotra said core investment companies, including Tata Sons, fall within the RBI's regulatory framework because of the financial risks associated with their operations and their position within large corporate groups.

Such companies primarily hold investments in other group entities and may have direct or indirect access to public funds.

"NBFCs and CICs, like for example, Tata Sons and others... are required to be registered with us," he said.

The RBI Governor explained that the registration requirement was intended to address systemic risks arising from the financial activities of holding companies.

He said these entities could raise funds and use the balance sheets of group companies to generate returns.

"The funds of the public, whether it is banks, whether it is through corporate bonds and other means, are at risk when these CICs do this kind of activity," Malhotra said.

He maintained that registration and listing requirements were necessary safeguards under the regulatory framework.

𝗧𝗮𝘁𝗮 𝗦𝗼𝗻𝘀' 𝗱𝗲𝗿𝗲𝗴𝗶𝘀𝘁𝗿𝗮𝘁𝗶𝗼𝗻 𝗯𝗶𝗱 𝗿𝗲𝗷𝗲𝗰𝘁𝗲𝗱

The RBI had rejected Tata Sons' application to surrender its registration as a core investment company in September, directing it to comply with regulations applicable to upper-layer NBFCs.

Tata Sons was classified as an upper-layer NBFC in September 2022, bringing it under rules requiring such entities to list within three years of classification.

The company had applied in March 2024 to surrender its CIC registration after repaying its debt, seeking to move outside the mandatory listing framework.

However, the central bank's rejection of the application has kept the listing requirement in place.

The development has brought renewed attention to the regulatory obligations of Tata Sons and the options available to the company as it seeks to determine its future corporate structure.

𝗧𝗮𝘁𝗮 𝗧𝗿𝘂𝘀𝘁𝘀 𝗼𝗽𝗽𝗼𝘀𝗲 𝗜𝗣𝗢

Tata Trusts, which collectively hold approximately 66 per cent of Tata Sons, have opposed taking the holding company public.

Tata Trusts chairman Noel Tata has argued that a stock market listing would fundamentally alter the character of the organisation.

On September 28, the Trusts proposed merging Tata Electronics Systems Solutions and Tata Consulting Engineers into Tata Sons as part of a restructuring plan.

According to the Trusts, the proposed arrangement would result in an entity that would no longer qualify as an NBFC or CIC under the existing regulatory definitions.

The Trusts have also sought an RBI no-objection certificate for the proposed restructuring.

The move is being examined as a possible alternative to a public listing, although the regulator has not indicated that the proposal would automatically exempt Tata Sons from its obligations.

𝗦𝗵𝗮𝗽𝗼𝗼𝗿𝗷𝗶 𝗣𝗮𝗹𝗹𝗼𝗻𝗷𝗶 𝗯𝗮𝗰𝗸𝘀 𝗹𝗶𝘀𝘁𝗶𝗻𝗴

The Shapoorji Pallonji Group, which owns approximately 18.37 per cent of Tata Sons, has supported a public listing.

Its chairman, Shapoorji Pallonji Mistry, has described the listing as a "social and moral imperative".

The differing positions of the two major shareholder groups have made the proposed IPO a significant issue within the Tata conglomerate.

While Tata Trusts favour retaining the holding company's privately held structure, the Shapoorji Pallonji Group has advocated listing its shares on stock exchanges.

Malhotra's remarks on Friday reinforced the RBI's broader regulatory position that companies meeting the criteria for registration and upper-layer classification must comply with the applicable listing rules.

However, he did not announce any fresh decision specifically concerning Tata Sons or its proposed restructuring.