According to the RBI’s scale-based regulations in September 2022, the Tata Group’s holding company, Tata Sons, was chosen as an upper-layer non-banking financial corporation. According to this classification, Tata Sons can list on stock exchanges within three years, which means up to September 2025 is the deadline.
As per the RBI regulations, the reason behind Tata Son’s getting NBFC-UL status is its bank borrowings. To improve governance and transparency in systemically important businesses, The upper-layer NBFCs law is required if the company wants to list publicly.
As per the sources, since December 2023, Tata Sons has been in talks with RBI (Reserve Bank of India) to avoid an IPO mandate, the company also tried to reduce a large amount of debt by wanting to avoid the NBFC-UL classification however, that didn’t happen.
Tata Sons has taken a big step and decided to reduce the company’s financial debt. The 9000 crore sale generated will be used to repay or to reduce the company’s debt. The 0.6 percent stake of the revenue from the sale will go to Tata Consultancy Services (TCS), one of the important and revenue-generated subsidiaries. They are also thinking of reducing its other debt by selling shares in some of its other subsidiaries. An agency called ICRA Ratings estimated that Tata Sons’ total debt was ₹15,173 crore, as of January 31.
According to the sources, if the company achieves the goal of completely paying off all the debt at the end of the financial year 2025, they do not need to follow NBFC-UL (Non-Banking Financial Company – Upper Layer rules, which involves the requirement to go public through an IPO (Initial Public Offering).
