RBI should reject Tata Sons application to deregister as a CIC: InGovern Research

The RBI should formally reject the application of Tata Sons to deregister itself as a Systemically Important Core Investment Company (CIC) to avoid mandatory IPO listing requirements and direct the Tata holding company to pursue a listing in line with (UL) NBFC requirements by March 2027, InGovern Research services , a corporate governance advisory firm, has said.

The firm added that granting exceptions to a conglomerate of Tata Sons’ scale could set a precedent for regulatory arbitrage and weaken the financial oversight framework. It has questioned Tata Sons’ bid to surrender its registration as a systemically important core investment company, arguing that the application is no longer tenable under the current regulatory framework and should be formally rejected by the Reserve Bank of India.

In a report titled “Tata Sons’ Deregistration: A Case for Regulatory Finality”, the firm said the holding company’s March 2024 application is effectively “dead on arrival” following regulatory changes introduced in 2026.

The report says the evolving Scale-Based Regulation (SBR) framework, along with clarifications issued by the RBI on April 29, 2026, have removed the legal and procedural basis for Tata Sons to exit the regulatory ambit applicable to large non-banking financial entities.

Tata Sons’ move to repay over ₹20,000 crore in standalone debt and position itself as free of public funds does not hold under the regulator’s “look-through” approach, which considers indirect access to public capital through group companies, the report stated.The firm noted that cross-holdings by listed Tata group entities—such as Tata Motors and Tata Power—create a structural linkage to public funds, weakening claims of exemption.

Tata Sons continues to be classified as an “Upper Layer” NBFC, with assets exceeding Rs 1.75 lakh crore—well above the Rs1,000 crore threshold required for voluntary deregistration. It adds that the September 2025 deadline for such applications has passed, making the proposal time-barred.

InGovern said allowing Tata Sons to remain unlisted while controlling large listed entities would run counter to regulatory consistency. It cited examples such as L&T Finance Holdings and other NBFCs that restructured or listed to comply with RBI norms rather than seeking exemptions.The note also flags governance concerns, saying the private status of Tata Sons limits transparency, weakens oversight of related-party transactions and may disadvantage over 1.2 crore public shareholders in Tata group companies.