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Tata Sons, classified as an NBFC-UL by RBI, may need to list on stock exchanges by September 2025 unless its de-registration application is approved.
Tata Sons IPO In September?
Tata Sons IPO In September? Tata Sons, the holding company of the salt-to-software conglomerate Tata Group, may be required to list on stock exchanges by September 2025 following its identification as an Upper Layer Non-Banking Financial Company (NBFC-UL) by the Reserve Bank of India (RBI). However, the company’s application for de-registration as an NBFC is still under review by the central bank, which, if approved, would exempt it from the mandatory listing requirements.
The Reserve Bank of India released the latest list of 15 NBFCs classified under the Upper Layer (NBFC-UL) category on January 16. Apart from Tata Sons, the list includes Tata Capital, LIC Housing Finance, Bajaj Finance, and Aditya Birla Finance, among others.
What Does Upper Layer NBFC Classification Entail?
Under the RBI’s “Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs,” NBFCs classified as Upper Layer must mandatorily list on stock exchanges within three years of identification. These norms, effective October 1, 2022, ensure enhanced regulatory oversight for large NBFCs due to their size, activities, and risk profile.
Tata Sons was categorized as an NBFC-UL on September 30, 2022, which means the company must list by September 30, 2025, unless it secures de-registration. Once classified as an NBFC-UL, a company remains subject to stringent regulatory requirements for at least five years, even if it no longer meets the criteria in subsequent years.
The RBI uses asset size and other parameters to classify NBFCs into four layers — Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL), Top Layer.
The Upper Layer comprise of those NBFCs which are specifically identified by the Reserve Bank as warranting enhanced regulatory requirement based on a set of parameters and scoring methodology.
The top ten eligible NBFCs in terms of their asset size always reside in the upper layer, irrespective of any other factor.
In terms of the framework, once an NBFC is classified as NBFC-UL, it will be subject to enhanced regulatory requirements, at least for five years from its classification in the layer, even in case it does not meet the parametric criteria in the subsequent year/s.
Tata Sons’ IPO: What’s the Status?
Tata Sons has applied to the RBI for de-registration as an NBFC, which would relieve it from the listing requirement. The RBI clarified, “Inclusion of Tata Sons Private Limited in the list of NBFC-UL is without prejudice to the outcome of its application for de-registration, which is under examination.”
Should the application be denied, Tata Sons would be obligated to comply with the listing requirement under the SBR framework.
Other Tata Group NBFC in Focus
In addition to Tata Sons, another Tata group entity, Tata Capital, has been identified as an NBFC-UL, meaning it, too, would be subject to mandatory listing under the current regulations.
