RBI Open to Tata Sons Staying Private, Seeks Shareholder Consensus

As per news reports, the Reserve Bank of India (RBI) is open to allowing Tata Sons Pvt Ltd, the $165-billion salt-to-software conglomerate’s holding company, to remain private, provided its two largest shareholder groups, Tata Trusts and the Shapoorji Pallonji (SP) group, arrive at a unanimous decision.

This decision comes ahead of the September 30, 2025, deadline for all large non-banking financial companies (NBFCs) to be publicly listed under the scale-based regulatory framework.

Tata Sons’ Compliance with Norms

In August 2024, Tata Sons voluntarily surrendered its NBFC licence after clearing over ₹20,300 crore in debt, thereby becoming cash-positive by March 2024.

This step satisfied one of the key criteria for exemption from mandatory listing. Despite this, Tata Sons was still included in the January 2025 RBI list of upper-layer NBFCs, which mandates public listing by September 2025. The RBI has clarified that the inclusion is “without prejudice” to Tata Sons’ pending application for de-registration.

Shareholder Divide: Tata Trusts vs. SP Group

While Tata Trusts, owning 66.8% of Tata Sons, prefers keeping the company private, the debt-laden SP group, with its 18.6% stake, favours listing to facilitate an exit. Ever since Cyrus Mistry’s ouster as Tata Sons chairman in 2016, the SP group has sought a liquidity event to monetise its holding, which remains pledged to lenders.

Financial Health and Investments

Tata Sons ended FY24 debt-free with a net cash balance of ₹2,670 crore, a sharp turnaround from its earlier net debt of ₹20,642 crore. This improvement was driven by a 57% surge in net profit to ₹34,654 crore in FY24 and strong dividend inflows, particularly ₹19,000 crore from Tata Consultancy Services (TCS). However, FY25 saw a 24.3% decline in net income to ₹26,232 crore, mainly due to reduced non-operating gains.

The holding company continues to back both new and legacy businesses. Between FY24 and FY25, Tata Sons invested ₹21,591 crore in subsidiaries, with nearly 95% channelled into unlisted firms. Tata Digital received ₹3,960 crore, Air India ₹3,225 crore, and Tata Electronics ₹3,000 crore, while legacy businesses like Tata Autocomp, Tata Capital, and Tata Projects also saw substantial funding.

Regulatory and Governance Concerns

The RBI’s insistence on a unified decision highlights the delicate balance between regulatory compliance and shareholder dynamics.

While Tata Trusts value strategic flexibility in remaining private, critics, including the SP group and some lawmakers, warn that bypassing listing may impact transparency, particularly given Tata Sons’ interconnectedness with its listed group companies.

Outlook

A final communication from RBI is expected once Tata Sons’ shareholders formally convey their joint decision. If exemption is granted, Tata Sons would avoid mandatory listing, preserving control within Tata Trusts but leaving the SP group dissatisfied.

The outcome will set a precedent for how India’s regulatory framework handles powerful conglomerates balancing strategic autonomy with shareholder interests.

Also Read: Tata Motors Reduces Car Prices by Up to ₹1.55 Lakh After GST Cut!

Conclusion

Tata Sons has taken significant steps to qualify as a private entity by eliminating debt and surrendering its NBFC licence. However, the decision ultimately rests on whether Tata Trusts and the SP group can reach consensus. While exemption from listing would align with Tata Trusts’ vision, it may deepen the conflict with the SP group, which seeks liquidity. The RBI’s final stance will shape not just Tata Sons’ governance but also broader policy on regulating large private financial conglomerates in India.

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