Proxy advisory firm asks RBI to reject Tata Sons’ bid to surrender licence
The Reserve Bank of India (RBI) should reject Tata Sons’ application to waive its registration as a core investment company, proxy advisory firm InGovern Research Services said on Friday. He said the regulatory environment had changed significantly and there was no longer any legal basis to grant immunity to an organization of this size.
“Based on a comprehensive analysis of the RBI’s latest directives, particularly the April 2026 amendment orders, the April 10 classification list and critical clarifications issued on April 29, the Tata Sons application is ‘dead on arrival’,” InGovern said in a note.
Mint It said on Friday that a statement by the central bank undermined Tata Sons’ attempt to distance itself from public funds, potentially keeping it in the top tier of non-banking financial companies (NBFCs), a category that requires tighter regulation and mandatory listing requirements. This complicates matters, especially for the Tata group’s holding company, which has been trying to remain private ever since the RBI introduced scale-based supervision of non-bank lenders.
In the statement, the RBI said that due to the use of leverage, multiple layers and fungibility of currency, it is difficult to ascertain with reasonable assurance whether the equity infusion of group entities is from their own funds. Tata Sons’ total assets were as follows: ₹1.75 trillion on a standalone basis as of March 31, 2025. Experts said this meant that Tata Sons, in which other listed Tata group companies also hold shares, had indirect access to public funds and was therefore not eligible to surrender the licence.
Compulsory public offering
InGovern said the regulator should issue a clear direction to Tata Sons to begin the process of listing as a top-tier NBFC in line with the latest guidelines. The transition to a listed entity will trigger disclosure norms of the Securities and Exchange Board of India (Sebi), he added. Manager for a holding company ₹With assets of 1.75 trillion, including giants like TCS, Tata Motors and Tata Power, these mandatory disclosures are vital for transparent management of related party transactions.
According to the note, the RBI’s cancellation of NBFC licenses of companies like Piramal Enterprises in December 2025 and Tata Motors Finance in October 2025 shows that the regulator accepts deliveries only in case of dissolution of the company or merger into a compliant, listed framework. “Tata Sons is attempting a ‘naked capitulation’ by trying to keep its structure intact while relinquishing its custody. This is procedurally inconsistent with the RBI’s handling of all other major upper-tier NBFCs in the 2025-2026 cycle,” he said.
He said legal analysis of the 2026 amendments confirmed that the RBI had deliberately narrowed the exemption window to prevent misuse of the corporate structure for regulatory arbitrage. “By creating a separate category for registration, the RBI has signaled that any holding company of a conglomerate with significant public interest assets is, by default, a regulated entity. Allowing an ‘archaic’ practice to override these modern-day standards would fundamentally violate the principle of competitive neutrality,” he said.
In 2022, the RBI published a list of top non-bank institutions and said they have three years to get listed. Many companies from this list like Tata Capital and HDB Financial Services were listed on time. Tata Sons remains the only company on this list to remain private.
Meanwhile, Tata Sons’ largest minority shareholder, Shapoorji Pallonji Group, is pushing for the listing of the firm as it seeks liquidity. SP Group owns 18.38% of Tata Sons, nine Tata Group firms own 12.86% and seven others hold the remaining 2.87%.
