What’s happening at Tata? RBI shuts exit route, IPO pressure mounts on Noel Tata
Tata Trusts controls about two-thirds of Tata Sons and has resisted the idea of a public listing. The regulator’s decision leaves the Trusts with fewer options.
The Reserve Bank of India (RBI) has rejected Tata Sons' request to exit its non-banking financial company (NBFC) framework, leaving India's largest business group facing a mandatory IPO. This decision increases pressure on the $185-billion Tata Group, as Tata Sons chairman N Chandrasekaran and chairman of Tata Trusts, Noel Tata, have differing opinions on the matter.
The RBI classified Tata Sons as an Upper Layer NBFC in 2022, giving it a three-year deadline to list on the stock market. The company did not meet this deadline as it sought to surrender its NBFC registration. The RBI tightened the rules this year, making it harder for large holding companies to escape the Upper Layer classification.
Tata Sons' large balance sheet, worth over ₹1 lakh crore, automatically places it in the Upper Layer category under the revised framework. Noel Tata opposes the listing, as it could affect Tata Trusts' control over Tata Sons and expose the group to greater scrutiny. The listing dispute has put Tata Sons' leadership under pressure, with Chandrasekaran and Noel Tata having differing views on the situation.
The board is considering various options, including reducing Tata Sons' balance sheet or restructuring the company, to prepare for a potential IPO.
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