Tata Sons Faces Ongoing Challenges as RBI Strengthens NBFC Regulations
MUMBAI: The Reserve Bank of India (RBI) has decided to maintain the asset threshold for upper-layer non-banking financial companies (NBFCs) at Rs 1 lakh crore, rejecting industry calls to raise it to Rs 2.5 lakh crore. This decision keeps Tata Sons, the holding company of India’s largest conglomerate, within the supervisory framework and subject to listing requirements. Tata Sons’ standalone assets were reported at Rs 1.75 lakh crore for FY26.
Industry stakeholders argued for a higher threshold, suggesting that it should reflect systemic importance through metrics of profitability and asset quality. However, the RBI stated that the Rs 1 lakh crore threshold is based on the current profile of the NBFC sector and an analysis of existing upper-layer entities. The central bank emphasized that asset size is a “reasonably good proxy” for systemic significance, asserting that the threshold captures NBFCs whose failure could threaten financial stability.
The RBI clarified that the classification of upper-layer NBFCs will not be automatic. It will identify these entities from those meeting the threshold. Compliance requirements for upper-layer NBFCs will only take effect once the RBI notifies a list. Tata Sons was classified as a UL-NBFC in September 2022, which triggered a listing requirement. The company has since repaid debt and applied to surrender its NBFC registration, a request currently under review by the RBI.
The Tata Sons board is reportedly divided on the IPO, with Noel Tata opposing the listing while Venu Srinivasan supports it. The RBI also reiterated that the classification will be based strictly on standalone audited balance sheets, not consolidated group accounts. Additionally, it plans to reduce the review cycle for the threshold from five years to three, indicating a more responsive approach to the evolving NBFC landscape. The RBI stated that “case-specific exemptions go against a principle-based regulatory regime,” a remark that could impact Tata Sons’ application to surrender its NBFC registration.
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