The Reserve Bank of India on Wednesday mandated that non-banking financial companies (NBFCs) having asset size of Rs 1 lakh crore and above would fall in the upper-layer category, rejecting the industry feedback of raising the cap to Rs 2.5 lakh which would have allowed Tata Sons to avoid public listing of its shares.

The upper-layer NBFCs are required to list their shares, a route which Tata Sons, the parent of India’s largest business group encompassing companies such as TCS, Tata Motors, Tata Steel, Tata Power, Titan and Air India, wants to avoid.

But by being silent on the definition of indirect receipt of public funds, it may have left some room of hope for Tata Sons to skip the public listing path. In the earlier April draft, the central bank had referred to this as “funds received not directly but through associates and group entities, which have access to public funds”. This was seen as a hurdle for Tata Sons to deregister as core investment company (CIC) to avoid public listing.

The RBI said Wednesday the upper layer category of NBFCs would be “specifically identified annually” by the regulator and attract more regulatory oversight. 

The current regulatory guidelines follow a draft circular floated by the RBI in April.Previously, upper-layer NBFCs depended on whether the companies ranked in top 10 by asset size in the country. 

“The upper layer shall consist of NBFCs having asset size of Rs 1,00,000 crore and above as per the latest audited balance sheet for the financial year,” RBI said.

It shall comprise of those NBFCs which are specifically identified annually by the Reserve Bank as warranting enhanced regulatory requirement based on the criteria,” it added.

The criteria for identification of NBFC-Upper Layer should be reviewed periodically. Further, the asset size threshold for the identification of NBFC-Upper Layer should be reviewed every three years, the central bank said.

Tata Sons

Tata Sons, which has an asset size of around Rs 1.9 lakh crore, had skipped the original deadline to list by September 2025. 

While publishing in January last year the list of upper-layer NBFCs expected to list, the RBI said Tata Sons’ application to surrender its NBFC licence was considered but the regulator has not mentioned anything after that.

Tata Sons is the holding company of over 30 publicly listed enterprises and hundreds of subsidiaries, spread across sectors like IT, steel, automotive and aviation.

Tata Trusts, the majority owner of Tata Sons, has passed a resolution saying the company should remain unlisted. A listing would dilute the control of the trust.

The RBI also issued guidelines for group entities of commercial banks. It said NBFCs, which are group entities of a commercial bank, should adhere to the applicable provisions in case a particular business/activity is being undertaken by both the NBFC and its parent bank.

"These provisions are applicable to the NBFCs which are group entities of scheduled commercial banks, irrespective of their layer-wise classification as per the provisions of these directions," it said.

However, such NBFCs would continue to be classified in the layer as per the regulatory structure under scale-based regulation, it added.

On government-owned NBFCs that are fully owned and controlled by the state, RBI said listing will not be mandatory, considering their developmental mandate.