To avoid RBI’s ‘upper-layer’ NBFC label, Tata Sons is anticipated to make its market debut by 2025

To avoid RBI's 'upper-layer' NBFC label, Tata Sons is anticipated to make its market debut by 2025

The holding company for the Tata Group, Tata Sons, is apparently considering ways to avoid being labeled by the Reserve Bank of India (RBI) as an upper-layer NBFC (non-banking financial firm). By September 2025, it might have to consider options including a stock market offering. An estimated Rs 11 lakh crore is assigned to the company’s worth.

Details on to avoid RBI’s ‘upper-layer’ NBFC label, Tata Sons is anticipated to make its market debut by 2025

According to a story in The Times of India, the central bank produced a list of 15 NBFCs on September 14 that included Tata Sons in the upper-layer category and called for more regulatory compliance. The Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL), and Top Layer (NBFC-TL) categories were established by the central bank.

Tata Trusts and other shareholders of Tata Sons would benefit greatly from the company’s stock market listing. According to the article, a 5% selling could be valued at over Rs 55,000 crore based on an estimated valuation of Rs 11 lakh crore for Tata Sons, making it one of India’s largest public offers.

News reports state that Tata Sons, under the direction of chairman N Chandrasekaran, had previously looked into the possibilities of obtaining an exemption from the RBI, which had initially published the list in September 2022.

According to RBI regulations, NBFC-ULs must put into effect a board-approved policy for embracing the expanded regulatory framework that applies to them and must then be mandated to list.

After IL&FS’s demise in 2018, the RBI tightened the NBFC regulatory environment. NBFC-ULs will be held to a stricter code of conduct and be required to disclose their financial information more openly.

Tata Capital Financial Services, another indirect subsidiary of Tata Sons, is also listed. Tata Capital Financial Services will be merged into Tata Capital by Tata Sons, which is also getting “listing-ready” for the stock market.

In its FY23 report, Tata Sons stated that “the simplified corporate structure will create a larger unified entity with a stronger capital and asset base, and shall help us move towards a listing-ready structure aligned with the RBI’s regulations.”

The list also includes LIC Housing Finance, Bajaj Finance, Shriram Finance, L&T Finance, Piramal Capital & Housing Finance, and Cholamandalam Investment and Finance Company in addition to Tata Sons and Tata Capital Financial Services.

The list also includes Aditya Birla Finance, Muthoot Finance, Tata Capital Financial Services, PNB Housing Finance, HDB Financial Services, Indiabulls Housing Finance, and Mahindra & Mahindra Financial Services.

TMF corporate Services Ltd. (previously Tata Motors Finance Limited) is not being included in the list of NBFC-UL in the current review despite meeting the criteria for designation as NBFC-UL, according to RBI, because of its ongoing corporate reorganization.

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