RBI Must Direct Tata Sons To List; Changed Regulatory Landscape Doesn't Allow Exemption: InGovern

Corporate governance advisory firm InGovern Research Services has urged the RBI to issue a clear directive to Tata Sons to initiate the listing process as an upper-layer NBFC by the March 2027 deadline, in accordance with its latest master directions.

In a report, InGovern said the regulatory landscape has shifted significantly, and there is no remaining legal basis to provide an exemption from public listing to an entity of the magnitude of Tata Sons, a holding company controlling about ₹1.75 lakh crore in assets.

It also requested the RBI to issue a definitive public order rejecting Tata Sons' application for de-registration as a core investment company that was filed to avoid a public listing.

Tata Sons' application filed in March 2024 to surrender its Certificate of Registration (CoR) as a Systemically Important Core Investment Company (CIC-ND-SI) is pending, InGovern said, adding that "this application has now been rendered substantively and procedurally deficient by the evolving regulatory landscape of 2026".

"Based on an exhaustive analysis of the Reserve Bank of India's (RBI) latest directives, specifically the April 2026 Amendment Directions, the April 10, 2026, classification list, and the critical clarifications issued on April 29, 2026 - the Tata Sons' application is 'Dead on Arrival'," it said.

It further said, "The attempt to circumvent mandatory listing obligations under the Scale-Based Regulatory (SBR) framework is incompatible with the current standards of financial oversight".

For a holding company controlling about ₹1.75 lakh crore in assets (including systemic listed companies like TCS, Tata Motors, and Tata Power), InGovern said, "SEBI's LODR (listing obligations and disclosure requirements) is essential to govern related party transactions (RPTs) and ensure that group-level capital allocation is transparent to the broader market".

"The Reserve Bank of India should issue an explicit, formal rejection of the application, thereby upholding the sanctity of the SBR framework and protecting the interests of over 1.2 crore public shareholders invested in the Tata ecosystem." Comments from Tata Sons could not be immediately obtained.

The proxy advisory firm noted that Tata Sons filed an application to surrender its registration as a CIC and "the strategic manoeuvre was perceived as an attempt to sidestep the mandatory listing obligations imposed by the RBI's Scale-Based Regulatory (SBR) framework".

"By aggressively repaying over ₹20,000 crore in standalone debt, the company claimed to have renounced its access to public funds, thereby seeking to move from a 'Registered CIC' to an 'Unregistered/Exempt' entity," it added.

However, InGovern said the RBI's clarification on April 29, 2026, regarding the feedback received on the draft 'Reserve Bank of India (Non-Banking Financial Companies - Registration, Exemptions and Framework for Scale Based Regulation) Amendment Directions, 2026 - "definitively strikes down the 'standalone deleveraging argument that Tata Sons has relied upon to justify its exit from the CIC regulatory perimeter".

The RBI addressed "the industry's attempt to carve out equity investments sourced from 'owned funds' from the definition of 'indirect public funds', the advisory firm said, adding that the central bank's "stance is unequivocal -- not accepted, due to use of leverage, multiple layers and fungibility of money, it is difficult to establish with reasonable assurance whether the equity infusion by Group entity is from their owned funds".

Recommending regulatory action, InGovern said the RBI must take action "to uphold the integrity of India's financial markets and ensure compliance with the 2026 framework".

"The RBI must issue a definitive, public order rejecting the March 2024 application for the de-registration of Tata Sons. The regulatory landscape has shifted significantly, and there is no remaining legal basis to provide an exemption to an entity of this magnitude," it pointed out.

The advisory firm further said, "Tata Sons should be issued a clear directive to initiate the listing process as an Upper Layer NBFC by the March 2027 deadline, in strict accordance with the latest master directions".

Citing the RBI's draft circular from April 10, 2026, which "proposes a strictly quantitative ₹1 lakh crore asset threshold for automatic Upper Layer classification", InGovern said it renders parametric scoring and debt-reduction defences obsolete.

"The regulator (RBI) should formalise this threshold immediately, ensuring Tata Sons (with standalone assets of ₹1.75 lakh crore) is bound by the listing mandate strictly by virtue of its systemic footprint, permanently closing the deregistration loophole," it said.

The regulator must apply the ₹1,000 crore threshold and the "indirect public funds" criteria without exception. Deviating from these standards for an entity of this size would diminish the credibility of the entire SBR framework, it asserted.