RBI to clear Tata Sons’ upper layer NBFC exit, with riders

Tata Sons is likely to receive approval from the Reserve Bank of India to de-register as an upper layer non-banking financial company (NBFC), subject to specific conditions, according to sources. The central bank may extend the September deadline for mandatory listing requirements while granting Tata Sons additional time to fulfill compliance obligations.

Company representatives have engaged in ongoing discussions with RBI officials regarding its classification status, with insiders suggesting a favorable outlook for the deregistration request. The Tata Group holding company declined to comment on the matter.

Valuation Considerations

Financial services sector experts believe approval hinges on resolving valuation disputes fairly. “Regulatory authorities will likely approve Tata Sons’ deregistration conditional on establishing fair valuation mechanisms for investors,” said Vivek Iyer, Partner at Grant Thornton Bharat. “An extension of the compliance timeline seems plausible, given the company’s unique circumstances.”

Iyer noted that Tata Sons’ positive cash flow position and debt-free status after recent repayments strengthen the case for deregistration. The Shapoorji Pallonji Group maintains an 18% stake in Tata Sons. The RBI has not responded to media queries regarding the status of the deregistration application.

Shareholder Exit Strategy

Industry sources indicate the RBI’s approval would depend on the presentation of a viable exit plan for the SP Group, Tata Sons’ largest minority shareholder requiring capital infusion. This development follows recent directives from Tata Trusts instructing the company to maintain its unlisted status while providing exit mechanisms for investors.

The SP Group recently secured financing through $3.35 billion in non-convertible debentures carrying a three-year maturity period. The Tata Group’s financial consolidation efforts include completing the merger of Tata Capital with Tata Motors Finance, while simultaneously preparing for a ₹15,512 crore public offering through Tata Capital Limited.

“Tata Sons originally qualified for upper layer classification based on financial service activity thresholds rather than its functional role as a holding company,” noted an NBFC sector executive. “With Tata Capital emerging as the group’s primary financial services entity, the rationale for deregistration appears stronger to regulators.”

Published on September 30, 2025