Tata Sons Exploring Ways To Get Out Of Upper Layer NBFC List: Report

Tata Sons, the parent company of the Tata group, is looking for a way to get exemption from an RBI notification that included it among the top 10 NBFCs in terms of asset size, The Economic Times reported Friday.

Citing people aware of the matter, the report said the Reserve Bank of India has also included Tata Sons among 16 NBFCs in the upper layer (UL).

Since the collapse of IL&FS in 2018, the RBI has been gradually tightening the regulatory framework for NBFCs. NBFC-ULs will be subject to a more stringent disciplinary structure and have to be more transparent with their financials as any uncertainty that affects them could also affect the economy.

Under RBI guidelines, NBFC-ULs have to implement a board-approved policy for adopting the enhanced regulatory framework applicable to them and mandatorily list within three years of this. Tata Sons Chairman N Chandrasekaran met RBI officials in this regard last week, the report said.

Tata Sons is a systemically important investment company and borrows heavily from the banking system, it added.

"It has so much of financial resources that it has to be extremely careful with its investments,” one of the persons cited above told ET.

The report said Tata Sons did not comment.

The holding company is home to 29 listed companies, nearly five dozen unlisted ones and hundreds of subsidiaries in 10 sectors.

“Tata Sons, which is a core investment company, holds stakes in several Tata companies and some companies hold stakes in Tata Sons,” the person said. “It is, in that sense, a complicated structure and while it holds tremendous clout in the banking system as a huge guarantor for loans taken by group companies, it does not directly take funds or lend to the public as a traditional NBFC.”