Tata Sons faces IPO deadline with RBI decision. What happens next?

Tata Sons Pvt. Ltd is likely to challenge the Reserve Bank of India's directive asking it to go public, as Tata Trusts Chair Noel Tata and most Trustees have maintained that the holding company of India's largest business group by revenues should remain private.

"That seems to be the only recourse - a legal route," said a Group executive when asked whether he will accept the regulator’s position or go to court. However, the executive added that no final decision has been taken and the future course is still being discussed.

“Everything is on Noel’s shoulders. Either he accepts or goes to court. The entire Tata Trusts board has taken a stand to keep it (Tata Sons) private. So, unless Tata Trusts reverses its stance, they (Tata Sons) are bound by it,” the executive said when asked whether Tata Sons may review its stance on IPO at its board meeting on 17 September.

Tata Trusts, which owns 65.9% of Tata Sons, had directed the board of Tata Sons last year to do everything to keep it private and to look at ways to give an exit to its largest minority shareholder, the Shapoorji Pallonji Group.

"The chairman of Tata Sons is requested to exercise best endeavours to ensure that Tata Sons does not change its current status as an unlisted private company and that Tata Sons fully engages with the Reserve Bank of India in this regard," read a resolution passed at the board meeting of Sir Ratan Tata Trusts on 28 July, 2025.

In a letter dated 11 September to Tata Sons chief financial officer Saurabh Agarwal, RBI said: “After considering the above and examining all the relevant factors, we advise that your request for voluntary surrender of CoR (certificate of registration) for being classified as unregistered CIC (core investment company) cannot be acceded to”.

“As such, we advise you to take necessary actions to ensure full compliance with all guidelines/instructions, as applicable to NBFC-Upper Layer (UL) issued by the RBI, immediately”. The letter, reviewed by Mint, did not mention any timelines.

The development comes against the backdrop of Tata Sons chairman N. Chandrasekaran's 12 August announcement that he would not continue beyond his current term when it ends on 20 February.

“I am sure the Tata Group may want to challenge the RBI's decision to force them to go public in court,” said Nitin Potdar, a Mumbai-based independent corporate lawyer. “This is especially because the RBI has previously allowed NBFCs, including Shanghvi Finance, to surrender their core investment company licence. So, on what grounds can the RBI direct Tata Sons to get listed?”

Shanghvi Finance Pvt. Ltd. is the privately owned firm of billionaire Dilip Shanghvi, founder of Sun Pharmaceutical Industries Ltd. It got an exemption from the RBI in 2023 to continue as a CIC.

“Secondly, under the Companies Act, no regulatory body, either Sebi or RBI, has the legislative power to force any company to go public. In fact, globally, no country or regulator has a law that forces any company to go public,” Potdar said.

"On the one hand, we invite global MNCs to operate in India irrespective of their size and allow them to delist by buying shares from Indian shareholders. So, how can the RBI force the country’s largest conglomerate to go public? The sequence and timing of events suggest factors outside the law drove the entire episode.”

Tata Sons board meeting

The RBI’s decision comes less than a week before Tata Sons board meeting scheduled for 17 September. One executive said the group's options and the road ahead would be the focus.

This means Noel Tata, who took over as chairman of Tata Trusts on 11 October, 2024, two days after the death of his half-brother, Ratan Tata, faces three immediate challenges: first, finding a successor to Chandrasekaran to lead the Tata Group, which includes all public and private companies and ended with ₹16,24,030 crore in revenue and ₹1,70, 525 crore profit in FY26.

This process can start only once a five-member selection panel is in place.

However, the process remains stalled because an important trust, the Sir Ratan Tata Trust (SRTT), cannot conduct any business. That's because a 15 May order of the Maharashtra Charity Commissioner prevents SRTT from holding board meetings or making decisions.

This follows allegations by one of its trustees, Venu Srinivasan, and a complainant of wrongdoing in the trust’s composition. Three of the six-member SRTT are permanent trustees in alleged violation of the Maharashtra Public Trusts Rules, which stipulate that no more than a fourth of trustees can be lifetime members.

“I am not surprised. It was coming,” said the founder and managing director of a Mumbai company, which does business with the Tata Group. “If you read the statements of the RBI over the last year, it was clear that [it was] in favour of Tata Sons going public. So, I would say it is a setback for Noel, who has repeatedly favoured the company to remain private. But, most certainly, I expect Tatas to contest this decision in the Bombay High Court.”

Largest minority shareholder of Tata Sons

The Shapoorji Pallonji Group, which owns an 18.37% stake in Tata Sons, stands to gain from a possible listing, as it could then sell shares to service its estimated ₹55,000-60,000 crore of debt.

“Yes, SP Group gets an upper hand once Tata Sons gets listed, because in related party transactions, when Tata Trusts cannot vote on resolutions, the SP Group could decide on decisions taken by the group,” senior Supreme Court lawyer H.P. Ranina said. “However, until now, SP Group has always backed all decisions of the Tata Group; so, there is no reason to believe it may not support the Tata Group going forward.”

Ranina added that the SP Group could also get a board seat when Tata Sons goes public, “as a minority investor would like to have representation on the board”.

RBI classified Tata Sons as an upper-layer non-banking financial company (NBFC) in September 2022 and directed it to list publicly by September 2025.

Requests for comments sent to SP Group and Tata Trusts went unanswered.

In early 2024, Tata Sons repaid all its debt and had a cash surplus, and on 28 March 2024 asked the central bank for permission to be removed from the list of so-called upper layer core investment companies, or large shadow banks.

Earlier this year in April, RBI issued another directive stating that shadow banks with assets exceeding ₹1 trillion needed to be listed. Tata Sons’s standalone assets of ₹2.01 trillion at the end of March 2026 exceed the central bank's new rules.

Lawyer Ranina called the decision a setback for Noel Tata, saying that he has few options other than to contest it in court. “But holistically speaking, a listing would bring more accountability, better corporate governance, and a mother of all IPOs.”