The TATA sons NBFC news update:
The Tata Group has petitioned the Reserve Bank of India (RBI) for an exemption to forego the obligation of listing its investment holding entity, Tata Sons.
In its appeal to the central bank, the group has argued that Tata Sons does not fall within the purview of the upper-layer non-banking finance company (NBFC) regulations and thus should be granted an exemption from the stipulated rules. This plea follows certain internal restructuring within the organization and a debt reduction, according to sources familiar with the matter.
Under the revised regulations issued by the RBI, upper-layer NBFCs are required to be listed within three years of the notification. On September 14, 2023, the regulator included 15 companies, including Tata Sons, in this category, thereby necessitating the holding company’s listing by September 2025.
In March, the company generated approximately Rs 9,300 crore by selling 23.4 million shares of its IT subsidiary, TCS, through block deals. Sources indicate that a portion of these proceeds was allocated towards debt repayment, although the exact amount of debt cleared was not specified.
Tata Sons has been exploring various avenues to shed its upper-layer NBFC classification. This exploration has involved considering options such as merging a subsidiary into itself or reducing debt to predefined thresholds. Additionally, seeking an extension to the regulations has been under deliberation.
Being classified as an upper-layer NBFC entails stringent compliance requirements and disclosure obligations, including adherence to banking licenses, NBFC regulations, and disclosures outlined in Core Investment Companies regulations.
Furthermore, the company has contemplated merging an operational non-financial services entity into its structure as part of its strategic evaluation.
