Will Tata Sons get listing waiver? RBI tweak will make it 'upper NBFC'

Reserve Bank of India on Friday proposed a simpler way to identify large non-banking financial companies (NBFC) for stricter regulation, pegging it to assets of over Rs 1 lakh crore, replacing a complex scoring system.

The proposed shift has immediate implications for large financial holding companies. Tata Sons, with a standalone asset size of Rs 1.75 lakh crore as of March 31, 2025, would fall within the proposed threshold. Its position remains contingent on regulatory approval of its application to surrender its core investment company registration, a step aimed at avoiding upper-layer classification and the associated requirement to list publicly.

Stiff rules stay for Tata Sons as revised NBFC norms widen net

MUMBAI: Tata Sons will remain under tighter scrutiny even after Reserve Bank of India's proposed overhaul of rules for large non-bank finance companies, which replaces a complex scoring framework with a single asset-size threshold.

The change places Tata Sons, with a standalone asset size of Rs 1.75 lakh crore as of March 31, 2025, within the proposed limit for stricter oversight. Its status, however, hinges on regulatory approval of its application to surrender its core investment company registration, a move aimed at avoiding upper-layer classification and the related requirement to list.

Under the draft directions, NBFCs with assets exceeding Rs 1 lakh crore will be designated as upper-layer entities, marking a departure from the earlier methodology that combined quantitative and qualitative parameters to assess systemic importance. The new approach removes discretion and replaces it with a clear, rules-based trigger, while also doing away with the automatic inclusion of the largest NBFCs and the detailed scoring matrix that previously underpinned the classification exercise.

The threshold itself will be reviewed every five years, with the identification of such entities to be carried out annually.

"The shift to an absolute asset threshold means RBI will publish a revised NBFC-UL list once the norms are notified. For Tata Sons, the outcome is binary.

"If it features on the list, it would indicate that its deregistration request has not been accepted, triggering a mandatory listing given its size. If it does not, though that appears unlikely, it would suggest RBI has acceded to the deregistration request," said Binoy Parikh partner at Katalyst Advisors.

The changes also extend to ownership neutrality. Govt-owned NBFCs, which were earlier kept out of the upper layer irrespective of size, will now be assessed on the same footing as private entities. This signals a more harmonised regulatory architecture, where scale alone determines the intensity of oversight.

"The draft directions on identification of upper layer NBFCs (NBFC-UL) propose to be driven by the asset size criteria, which provides clarity to all stakeholders. Further inclusion of govt owned entities too, based on their size, indicates a more harmonised way of identifying NBFC-UL. Based on the existing position, the number of NBFC-UL would go up vis-a-vis 15 entities identified previously," said AM Karthik, senior vice-president, Icra.



With the draft open for public comments until May 4, the final contours of the framework will determine not just the breadth of the upper layer but also the regulatory trajectory for large conglomerate holding companies. The new regime gains in clarity and predictability.
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