Tata Sons is currently caught between the Reserve Bank of India’s (RBI) regulatory requirements for upper-layer NBFCs and a decision made in 2024 to remain a private, unlisted company. The company’s effort to surrender its NBFC registration and exit the regulatory framework has now been turned down by the central bank.
In March 2024, under the guidance of the late Ratan Tata, the Tata Sons board unanimously decided to keep the company unlisted and applied to the RBI to surrender its NBFC certificate of registration. Tata Sons subsequently repaid its borrowings and prematurely redeemed preference shares worth around Rs 20,000 crore.
The issue arose from Tata Sons’ regulatory classification as an upper-layer non-banking financial company under the RBI’s scale-based regulatory framework. Although the framework requires upper-layer NBFCs to be listed, it also allows them to voluntarily undertake strategic changes to their operations and potentially move out of the enhanced regulatory framework. Tata Sons chose to pursue this second option.
The application remained pending for over two years.
On September 11, 2026, the RBI rejected the application and directed Tata Sons to take the required steps to comply with the rules and directions applicable to an upper-layer NBFC. According to Noel Tata’s interpretation of the communication, the letter does not specifically refer to listing, prescribe any particular course of action or state that Tata Sons is currently in violation of the rules.
At the September 17 board meeting, Noel Tata argued that Tata Sons should examine alternative routes, including restructuring and legal options, before moving towards a listing.
His objections are closely linked to Tata Sons’ distinctive ownership structure.
THE OWNERSHIP PUZZLE
Charitable trusts operating under the Tata Trusts umbrella together own around 66% of Tata Sons, making them its controlling shareholders. Dividends received from Tata Group companies are channelled through the Trusts towards philanthropic initiatives such as hospitals, universities, research and other charitable activities.
According to Noel Tata, this ownership arrangement makes Tata Sons fundamentally different from a traditional holding company. The structure directly links the group’s commercial activities with its philanthropic responsibilities.
“The commercial enterprise and the philanthropy are not adjacent to one another; they are one structure seen from two ends,” Noel Tata said in his statement to the board.
He also believes this arrangement has enabled Tata Sons to make decisions that might not be justified solely by short-term financial considerations.
His statement cites several historical examples. Sir Dorabji Tata pledged his personal assets to help protect Tata Steel. Tata Sons later provided funds to safeguard depositors and creditors after unauthorised fund diversions were uncovered at Tata Finance in 2001. The company also took responsibility for settling Tata Teleservices liabilities amounting to tens of thousands of crores.
Noel Tata describes these instances as evidence of the broader responsibilities Tata Sons has assumed within the Tata Group. His argument is that the company may sometimes need to deploy capital because of obligations towards the larger group and its stakeholders, even when the immediate financial returns do not justify doing so.
He believes making Tata Sons a listed company could make such decisions more difficult.
WHAT HAPPENS WHEN PUBLIC SHAREHOLDERS COME IN
If Tata Sons were to become publicly listed, Tata Trusts would share ownership with public investors, including institutional and overseas investors. Noel Tata does not argue that the interests of these shareholders would be inappropriate. Instead, he says their objectives and responsibilities would differ from those of the Tata Trusts.
He has raised the possibility of Tata Sons being required to support a struggling group company or invest in a new venture whose returns may take 15 years to materialise.
“It is doubtful that such shareholders would sanction the deployment of capital to rescue a Group company in distress, or the funding of a greenfield venture whose returns lie fifteen years away,” he said.
He clarified that this was “not a criticism” of public shareholders, but rather an acknowledgement that their investment mandate would differ from that of Tata Trusts.
The issue is particularly relevant given the Tata Group’s long-term investments in areas such as semiconductors, electronics manufacturing and civil aviation. Noel Tata’s statement characterises these projects as requiring patience over decades rather than being evaluated on quarterly returns.
RATAN TATA'S DECISION STILL HANGS OVER THE DEBATE
Tata Sons had already reached an internal decision on the matter in March 2024.
The board unanimously resolved at the time to keep the company unlisted, with the decision taken under Ratan Tata’s guidance, according to Noel Tata’s statement. Tata Sons subsequently approached the RBI seeking voluntary surrender of its registration.
The company then made a substantial financial commitment in line with that decision. It repaid borrowings and prematurely redeemed preference shares totalling approximately Rs 20,000 crore, using internal funds and proceeds from the monetisation of Group holdings. Tata Sons also decided against taking on additional debt, a policy Noel Tata says has remained in place since March 2024.
“A company does not commit Rs 20,000 crore to preserve form,” Noel Tata said. “It does so to preserve substance.”
The Tata Trusts backed this position in 2025. In May, trustees of the Sir Dorabji Tata Trust and Sir Ratan Tata Trust unanimously concluded that a listing would have significant implications for the Trusts. In July, both Trusts passed resolutions supporting Tata Sons remaining unlisted and called on the company to explore ways to retain that status while engaging with the RBI.
Therefore, the Trusts’ opposition to a listing existed before the RBI’s September 11 decision. Their July 2025 resolutions had already formally stated that Tata Sons should remain unlisted.
NOEL TATA WANTS TO KEEP THE LISTING DOOR CLOSED
The immediate issue now is how Tata Sons will respond to the RBI’s rejection.
Noel Tata has argued that the company should pursue every available alternative before considering a listing.
“The communication of September 11, 2026 declines an application for voluntary surrender of registration,” he said. “On my reading, it does not say that listing is the only option.”
He wants Tata Sons to submit a detailed representation to the RBI, obtain legal advice and examine all legally permissible alternatives, including restructuring. He has also suggested that Tata Trusts should be consulted before the company makes any submission to the RBI, appoints advisers or decides on the structure and timing of any potential changes.
If Tata Sons ultimately has to list, Noel Tata has suggested that the company be given three years to complete the process. However, he has not accepted that listing is inevitable; the three-year period is being proposed only as a fallback should the regulator eventually make listing a requirement.
He has pointed to the extensive preparations that a listing would involve, including shareholder approvals, amendments to the Articles of Association, preparation of consolidated financial statements, due diligence and valuation. He has also highlighted the Tata Group’s existing financial commitments and investments that require long periods to generate returns.
His position on a board vote, however, is unequivocal.
“If I am forced to vote, then I would have no option but to veto any such decision to list,” Noel Tata told the board.
His concluding argument focuses on the broader philosophy behind the Tata structure. “This is not sentiment. It is the operating model of this House,” he said. “A listing will destroy its character and strike at the heart of this principle.”
