RBI keeps Tata Sons in NBFC upper layer list, maintains status quo on listing

Mumbai: The Reserve Bank of India (RBI) on Thursday retained Tata Sons Pvt. Ltd in the upper layer of non-banking financial companies (NBFCs-UL) for FY27, leaving the Tata Group holding company subject to enhanced regulatory requirements while the central bank decides on the company’s application to surrender its core investment company (CIC) registration.

A media release by the RBI showed that Tata Sons continues to feature as a CIC. The statement clarified that the company’s inclusion is without prejudice to the outcome of its deregistration application, which remains under examination, same as what it had said in the last list in January 2025.

The decision means that Tata Sons' ability to avoid the proposed listing will depend on whether the RBI approves its request to surrender its CIC registration.

Under the revised framework, an NBFC classified in the upper layer remains subject to the enhanced regulatory regime for at least five years, even if it no longer meets the eligibility criteria in subsequent years.

The RBI also said upper-layer NBFCs may move out of the enhanced regulatory framework before the end of the five-year period if the move is part of a voluntary strategic readjustment under a board-approved policy.

“This stipulation shall not apply if the scaling down of operations is on account of adverse situations specific to the NBFC and its deteriorating financial conditions,” the central bank said.

“This essentially maintains the status quo for Tata Sons. Since its application for deregistration as an NBFC is still under examination, the company will continue to be treated as an upper layer NBFC and comply with the applicable regulatory requirements until the RBI takes a final decision,” said Abizer Diwanji, founder at NeoStrat Advisors.

Diwanji said the five-year continuity provision in the revised framework applies to NBFCs that no longer meet the asset-based criteria, whereas Tata Sons is a separate case because it is seeking deregistration.

“The intent behind the RBI’s revised framework was to ensure that entities such as Tata Sons, which voluntarily seek de-registration as a CIC, are not required to continue complying with the enhanced upper layer regulatory requirements for the next five years,” said Prakash Agarwal, partner at Gefion Capital.

“The deregistration process and the upper layer classification are parallel issues. Once the RBI approves Tata Sons’ deregistration application, the five-year continuity requirement should, in my view, no longer apply to the company,” Agarwal said.

A person familiar with the matter had told Mint on 5 August that the RBI could grant relief from the listing requirement in exceptional cases.

Earlier on the same day, Mint reported that RBI governor Sanjay Malhotra had indicated Tata Sons could continue to feature on the revised upper-layer list and that the central bank's shift to a principle-based framework had made it easier to determine which NBFCs qualify for the upper layer without relying solely on a published list.

While Tata Sons’ case is different because it has sought deregistration as an NBFC rather than merely falling below the threshold, the five-year continuity provision underscores the RBI’s preference for regulatory continuity.

Why it matters

The upper layer forms part of the RBI's scale-based regulation framework, which classifies NBFCs into four tiers—base, middle, upper and top—based on their size, activity and systemic importance. The top layer is intended to remain empty unless the RBI identifies extraordinary systemic risks.

NBFCs with an asset size of ₹1 trillion or more, based on their latest audited balance sheet, are classified in the upper layer and become subject to enhanced regulatory requirements. One of the key requirements is mandatory listing on stock exchanges within the timelines prescribed by the RBI.

Tata Sons had standalone assets of ₹2.01 trillion at the end of March 2026. Its listing now hinges on whether the RBI accepts its application to surrender its 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 wider context

The latest upper-layer list comprises 17 NBFCs, including REC Ltd, Power Finance Corp. Ltd, Indian Railway Finance Corp. Ltd, Bajaj Finance, Shriram Finance, LIC Housing Finance, Cholamandalam Investment and Finance, Tata Capital, Tata Sons, Muthoot Finance, Aditya Birla Capital, Housing and Urban Development Corp., Mahindra & Mahindra Financial Services, L&T Finance, Bajaj Housing Finance, HDB Financial Services, and Piramal Finance.

Among them, Tata Sons is the only unlisted company.

The RBI also said PNB Housing Finance and Sammaan Capital, which no longer meet the revised identification criteria, will continue to remain in the upper layer because the framework requires NBFCs to stay under the enhanced regulatory regime for at least five years after classification.

PNB Housing Finance’s standalone assets were at ₹93,533 crore and that of Sammaan Capital's was at ₹71,124 crore at the end of March 2026.

The regulator did not issue an upper-layer list for FY26 while reviewing the identification criteria. The FY27 list has now been prepared under the revised framework using financials as of 31 March 2026.