RBI governor Sanjay Malhotra has reaffirmed that upper-layer NBFCs must list, keeping Tata Sons subject to the requirement while its application to surrender core investment company status is considered.
Reserve Bank of India Governor Sanjay Malhotra has renewed the central bank’s warning that large non-banking financial companies in the upper layer of the RBI’s regulatory framework must be listed on stock exchanges. Speaking in New Delhi on Friday, Malhotra said the rule applies to upper-layer shadow banks and core investment companies that tap public money or use a wider business group’s balance sheet to support those funds.
His remarks came as the RBI kept Tata Sons in its upper-layer NBFC category while it continues to examine the conglomerate’s application to deregister as a core investment company. Business Standard reported that the bank’s latest decision leaves Tata Sons subject to the normal obligations for upper-layer NBFCs, including the requirement to list within three years of classification. The RBI has also made clear that the company’s inclusion is without prejudice to the outcome of its pending deregistration plea.
Malhotra said the logic behind the framework is financial stability. According to his comments, the risk arises when such firms raise money from the public through bonds, banks or similar channels, then sit at the top of a group structure that can be used to support those obligations. He added that only core investment companies without direct or indirect access to public funds are exempt from registration.
The issue is especially sensitive for Tata Sons, which remains at the centre of a governance dispute inside the Tata group. Some trustees are said to favour a public listing, both to meet regulatory requirements and to support future capital spending, while Tata Trusts chairman Noel Tata is exploring alternatives that would keep the holding company private. Tata Sons has argued that it should no longer fall within the mandatory listing regime because it has paid down its debt and is seeking to surrender its CIC registration. Earlier this month, Noel Tata also filed a caveat in the Bombay High Court involving fellow trustee Venu Srinivasan and three others, a move that ensures he must be heard before any order is passed in an expected matter.
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