RBI inserts indirect public funds definition, Tata Sons listing back in focus

A week after raising hopes that Tata Sons Pvt. could avoid a mandatory listing, the Reserve Bank of India on Wednesday inserted a key definition that was absent in its updated guidelines. Now, a potential listing is dependent on the RBI's decision on Tata Sons' application to surrender its core investment company (CIC) licence.

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. This definition was not there in the central bank’s 24 June circular—which is still on its website—but restored in a footnote on Wednesday’s updated version, with effect from 1 July 2026.

The definition is crucial for Tata Sons. Although the company has no direct access to public funds after repaying its debt in 2024, listed Tata 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 RBI's definition.

Experts said that the sequence of amendments appears to be more in the nature of a drafting clarification than a substantive shift in regulatory policy.

“The reintroduction of the explanation defining ‘indirect access to public funds’ in the 1 July circular indicates that the Reserve Bank of India intends to remove interpretational ambiguities and ensure consistent application of the upper layer NBFC framework,” said Siddartha Karnani, partner at King Stubb & Kasiva, Advocates and Attorneys.

He said that any ambiguity in the language can lead to inconsistent interpretation by regulated entities and market participants.

“At the same time, multiple revisions to the same regulatory framework within a short period can create uncertainty for NBFCs, particularly those assessing their regulatory status and compliance obligations,” Karnani said.

Queries emailed to Tata Sons were not immediately answered.

In 2022, RBI had released a list of so-called upper-layer NBFCs, giving them three years to get listed. Several from that list—including Tata Capital Ltd. and HDB Financial Services Ltd.—got listed in time. Tata Sons remains the only company in that list to still remain private.

RBI has now defined the upper layer as non-banks with assets of ₹1 trillion, although it had received feedback that it should raise the threshold to ₹2.5 trillion. Tata Sons had standalone assets of ₹1.7 trillion at end-March 2025.

Tata Sons’ listing now hinges on RBI accepting its application to surrender its core investment company 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.

As per RBI’s circular from 10 March, a core investment company can remain unregistered on two occasions.

• First, if it has an asset size below ₹100 crore, irrespective of whether it is accessing public funds or not.
• Second, if it has an asset size of ₹100 crore and above, but not accessing public funds.

On Tuesday, RBI published a checklist that non-banks need to meet when applying to surrender licences. Under these norms, core investment companies need to have a board resolution showing it has approved the surrender of registration.

It should also say that the company will apply for a certificate from the RBI within three months of meeting the criteria of a core investment company—has accepted public funds and its assets are ₹100 crore or above.

Tata Sons’ FY24 annual report says that during the financial year, the company applied to RBI for voluntary surrender of certificate of registration as a CIC and to continue as an unregistered CIC in accordance with the prescribed procedure.