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Tata Sons, the holding company of the country’s largest and prestigious corporate house ‘Tata Group’, has received a major blow from the Reserve Bank of India (RBI). The central bank has decided to keep Non-Banking Finance Corporation (NBFC) norms strict, leaving Tata Sons with no relief on the regulatory front.
RBI has completely rejected the demand of the corporate world to increase the asset limit from Rs 1 lakh crore to Rs 2.5 lakh crore for joining the ‘upper-layer’ of NBFCs. If understood in simple language, this strict stance of RBI means that Tata Sons will still remain under the strict supervision of the Reserve Bank (CIC-Core Investment Company) and under the rules it will be mandatory for it to be listed in the Indian stock exchange.
Why did Tata Sons want change in asset limit?
It was being argued for a long time by the NBFC sector and Tata Group that to decide the status of any company, not only the size of assets but also its profits, financial stability and asset quality should be considered. If RBI had accepted the demand of the industry and increased the asset limit to Rs 2.5 lakh crore, then Tata Sons would have been completely out of the purview of this stringent rule.
As per the data for the financial year 2026 (FY26), the total standalone assets of Tata Sons have been recorded at Rs 1.75 lakh crore. This asset is more than the existing limit of Rs 1 lakh crore of RBI, but was less than the proposed limit of Rs 2.5 lakh crore. However, the Reserve Bank did not waver from its financial stability decision.
If a company sinks then the entire financial system is at risk: RBI
The Reserve Bank has given a very strong argument behind maintaining this limit of Rs 1 lakh crore. RBI says that this limit has been decided only after a thorough analysis of the ground reality of the existing NBFC sector and the financial profile of the companies falling under this purview.
The central bank made it clear that under the principle of ‘Too Big to Fail’, the sinking or crisis of any big financial company of this level can pose a major threat to the stability of the financial system and banking network of the entire country. Let us tell you that RBI had first included Tata Sons in the category of ‘upper-layer NBFC’ in September 2022 itself, after which it became legally necessary for it to launch its IPO in the stock market.
Trick to surrender registration after paying off loan; There was open discord in the board
Tata Sons had recently taken a strategic step to avoid the strict legal rules and obligations of stock market listing and IPO. The company fully repaid all its outstanding debts (Debt-Free) and applied to RBI to surrender (cancel) its NBFC registration, declaring itself to be out of the scope of core investment company. This application of Tata Sons is still pending with RBI.
Meanwhile, within the board room of Tata Sons, ideological differences between the two giants regarding listing have come to the fore:
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Noel Tata: Noel Tata, the director nominated by Tata Trusts, is strongly against the company’s stock market listing and IPO. He believes that the confidentiality of the holding company should be maintained.
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Venu Srinivasan: Venu Srinivasan, the other nominated director of the trust, is in favor of the listing. They argue that public listing will increase transparency.
Let us tell you that Tata Trusts is the largest and main shareholder in Tata Sons, hence the eyes of the entire market are fixed on this internal dispute of the board.
Investigation will be done from standalone balance sheet; Tata Sons’ problems will increase
RBI has made it clear in its new order that the valuation of any NBFC company will not be done on the basis of consolidated accounts of its entire group, but on the basis of its individual standalone audited balance sheet only. Additionally, the central bank will now review this asset limit every 3 years instead of every 5 years to keep a close eye on the rapidly changing financial environment.
Most importantly, RBI has clearly said that it will not give any ‘special exemption’ or concession in this rule to any specific company. Market analysts believe that this comment of RBI may have come directly in the context of some government NBFCs, but its direct and deep impact will be on the application for cancellation of registration of Tata Sons, due to which it is almost certain for Tata Sons to move forward on the path of IPO.