Upper layer NBFCs must register and list: RBI Governor Sanjay Malhotra

Reserve Bank of India RBI Governor Sanjay Malhotra on Friday said that Tata Sons the holding company of the USD 180 billion Tata conglomerate will need to follow the requisite listing norms as long as it remains classified as an upper layer NBFC or CIC according to news agency PTIWhile justifying the classification of the holding firm as an upperlayer nonbanking financial company NBFC Malhotra said thar any large NBFCs or core investment companies CIC that handle public funds or leverage a groups balance sheet need to be registered with the RBI and follow the requisite listing normsAs long as it is an NBFC within our definition it is a CIC it has access to funds direct or indirect its required to be registered and if it is in the upper layer then it is required to list he said at the NDTV World SummitLarge NBFC and CICs need to register due to systemic risksHe said that large NBFCs and CIC like Tata Sons and others are required to be registered with the central bank because of the systemic risks because they sit on top of group companies where they leverage funds and they use the balance sheets of the group companies to return those fundsSo the funds of the public whether it is through corporate bonds banks and other means that is at riskso it is for these reasons that these CICs or NBFCs are required to be registered he saidCICs that do not have direct or indirect access to public funds are exempt from the registration requirement he clarifiedTata Trusts trying to keep Tata Sons unlistedThe RBI Governors statements come amid Tata Trusts the largest shareholder in Tata Sons pushing to keep the holding company privateTata Trusts Chairman Noel Tata last month had urged the Tata Sons Board to explore all other options outside of listingTata in a statement to board members had pointed out that the RBI communication on September 11 does not mention listing and the regulator has not prescribed any particular step nor has it said the company is in breachTata Sons sought to deregisterTata Sons had sought deregistration in March 2024 after becoming debt free to avoid the listing requirement that applies to upper layer NBFCsHowever last month the apex bank had rejected Tata Sons application to surrender its nonbanking finance company NBFC licence which means the holding company faces the mandatory listingDespite being a CIC Tata Sons had exposure to bank debt as it had borrowed money on behalf of its group companies as some were relatively new or did not have strong enough credit profiles to borrow cheaply on their own At the request of the banks it also acted as a guarantor for some of the subsidiaries while charging them a fee Because of these interconnected financial arrangements the RBI wanted greater regulatory oversight and transparency by treating Tata Sons as a CIC under the NBFC frameworkThe RBI had classified Tata Sons as an upper layer NBFC in September 2022 with such entities required to list within three years with the original deadline of September 30 2025 for Tata Sons However Tata Sons wanted to remain a privately held company and had sought to exit the NBFC framework before that deadline by repaying more than Rs 21000 crore of debt in 2024 The company had applied to surrender its registration seeking to operate as an unregulated holding company but the regulator kept the application pending and continued to include Tata Sons in its upper layer NBFC listsThe RBI introduced a scalebased regulatory framework for NBFCs in October 2021 sorting lenders into base middle upper and top layers with progressively stricter oversight The revised RBI norms effective June 2026 said any NBFC with assets of Rs 1 lakh crore or more sits in the upper layer and Tata Sons with its standalone assets of over Rs 2 lakh crore as of March 2026 falls under this bracketWith inputs from PTI