Upper Layer NBFCs – Answering all, except the principal question

RBI has just released its latest list of 17 NBFCs identified as upper-layer (UL) NBFCs. The list includes Tata Sons, although it remains the only CIC in that list. However, the RBI is yet to make up its mind on whether Tata Sons should be listed.

The new list of upper layer NBFCs

The RBI has just released its latest list of UL-NBFCs based on FY26 financial data. RBI has already underlined that its classification of UL-NBFCs will be purely based on asset size with limited room for discretion. The list of 17 NBFCs comprises of 10 investment & credit companies, 4 infrastructure finance companies, 2 housing financing companies, and just 1 core investment company (CIC) i.e. Tata Sons. Incidentally, Tata Sons qualifies in the UL list due to its asset size being over ₹1,00,000 crore. Tata Sons has applied for exemption from such a classification by repaying its deposits. The final word from RBI is awaited.

Tata Sons is a CIC, but fairly significant

Several market players, especially the proxy firms, are of the view that considering its size and influence; Tata Sons must be subject to NBFC-UL regulations. Let us look at some of the numbers. What is the portfolio valuation of Tata Sons? If you just consider the top-15 listed holdings of Tata Sons, it is worth ₹14,00,000 crore at current market prices. The smaller holdings could add a few hundred crores to this tally. Then there are the unlisted businesses like semiconductors, Air India, digital properties etc. If all these are added up, the value goes up further. Most of these portfolio companies have large public shareholding and also raise money from the public. That makes it really significant!

RBI silent on the most critical issue

One thing that is intriguing is the delay in taking a decision on this issue. Tata Sons had applied to the RBI back in March 2024 to surrender its CIC registration. Noel Tata has clearly stated that he does not intend to list Tata Sons as it would be against its core objectives of charity and incubation of new businesses. Their view is that listing Tata Sons will expose the company to restrictions on incubation of new businesses and make them substantially accountable to institutional shareholders. It is in this light that Tata Sons had also repaid all its deposits before applying for the surrender of its CIC registration. Despite the passage of over 2 years, the RBI is yet to take a final view.

Draw a line between tighter regulation and listing

One way to address this issue is to draw a clear line between tighter regulation and mandatory listing. Apparently, Tata Sons does not have an objection to tighter regulation considering its reach and influence. What Tata Sons objects to is mandatory listing. After all, whether to list or not, is a decision left to the board of directors of the company in the best interest of shareholders. If Tata Sons is not taking public deposits and is willing to surrender its CIC registration, the best way for the RBI is to draw a line between stringent regulation and mandatory listing. The former can be compulsory, but the latter can be made optional. That should gratify all the parties involved.