RBI hints Tata Sons may remain upper-layer NBFC

The Reserve Bank of India (RBI) on Wednesday hinted that Tata Sons could remain classified as an upper-layer non-banking financial company (NBFC) under its revised principle-based framework, while signalling that the updated list of upper-layer NBFCs will be released shortly.

The clarification came after reporters sought to understand whether Tata Sons would continue to feature in the upper-layer category after the RBI replaced entity-specific classifications with a principle-based identification framework.

The upper layer comprises systemically important NBFCs that face tighter regulatory and supervisory requirements because of their size, interconnectedness and potential impact on financial stability.

Responding to questions at the post-monetary policy press conference, governor Sanjay Malhotra said the shift to a principle-based framework has made it easier to determine which NBFCs qualify for the upper layer without relying solely on a published list.

“I think it is now principle-based, so as per those principles, everyone knows what is the list, and so that is a matter of standard,” Malhotra said. He added that the RBI would nevertheless publish the updated list soon.

When asked specifically whether Tata Sons would continue in the upper layer, Malhotra said, “That continues to be in…all those which meet the criteria, they continue.”

He declined to comment further on the conglomerate.

“As we mentioned that it is principle-based, and that will continue. Let us not ask questions relating to a specific entity. The matter is what the status is, what it was earlier,” Malhotra said.

A person familiar with the matter, speaking on condition of anonymity, said the RBI can grant relief from the listing requirement in exceptional cases.

Why it matters

The RBI recently shifted to a principle-based framework under which NBFCs meeting prescribed thresholds and supervisory criteria automatically qualify for the upper layer.

The framework forms part of the RBI's scale-based regulation architecture, which classifies NBFCs into base, middle, upper and top layers according to their risk profile and systemic significance.

On 1 July, the RBI restored a key definition that had been absent from its updated guidelines. The central bank had earlier defined indirect receipt of public funds as “funds received not directly but through associates and group entities which have access to public funds” in a 29 April circular.

The definition was omitted from the RBI's 24 June circular, which remains on its website, but restored in a footnote with effect from 1 July 2026.

Mint reported on 1 July, citing experts, that the sequence of amendments appeared to be a drafting clarification rather than a substantive shift in regulatory policy.

The definition is important for Tata Sons. Although the salt-to-software conglomerate has no direct access to public funds after repaying its debt in 2024, listed group companies including Tata Steel Ltd, Tata Chemicals Ltd, and Tata Power Co. Ltd own stakes in it, making it an indirect recipient of public funds under the RBI's definition.

In 2022, the RBI released a list of upper-layer NBFCs, giving them three years to get listed. Several companies on that list, including Tata Capital Ltd and HDB Financial Services Ltd, completed their listings within the deadline. Tata Sons remains the only company on the list that is still privately held.

Whether Tata Sons must list now depends on whether the RBI accepts its application to surrender its core investment company (CIC) registration, which the company has already submitted.

A core investment company is a non-bank whose business is to acquire shares and securities, and hold at least 90% of its net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies.

The RBI defines the upper layer as non-banks with assets of ₹1 trillion, although it had received feedback that the threshold should be raised to ₹2.5 trillion. Tata Sons had standalone assets of ₹2.01 trillion at the end of March 2026.