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The MPs say any exemption to Tata Sons from full compliance, including listing, with the RBI Scale Based Regulatory Framework will dilute the level-playing field in the country and set a precedent for other corporates.
In September 2022, the RBI classified Tata Sons among 15 NBFCs in the Upper Layer, requiring them to list their shares on a recognised stock exchange within three years.
Two MPs have written to the Reserve Bank of India (RBI) raising concerns over Tata Sons‘ application to deregister as a core investment company and flagging a potential conflict of interest of a board member. They said the move to deregister the entity as UL-NBFC is aimed at circumventing mandatory listing requirements for the Upper Layer Non-Banking Financial Companies (NBFC-UL).
In separate letters to RBI Governor Sanjay Malhotra, the two MPs — Porika Balram Naik (a former Union Minister and a Congress MP from Mahabubabad, Telangana) and Tangella Uday Srinivas (a Jana Sena Party MP from Kakinada, Andhra Pradesh) — also highlighted a potential conflict of interest involving Venu Srinivasan, who sits on the boards of both Tata Sons and the RBI.
They said that any exemption to Tata Sons from full compliance, including listing, with the RBI Scale Based Regulatory Framework will dilute the level-playing field in the country and set a precedent for other corporates.
Tata Sons is the holding company of the salt-to-software conglomerate Tata Group. In September 2022, the RBI classified Tata Sons among 15 NBFCs in the Upper Layer, requiring them to list their shares on a recognised stock exchange within three years. On January 16, 2025, the RBI again classified Tata Sons as an Upper Layer NBFC.
Srinivas in his letter to the RBI said “In 2017, Tata Sons moved from a public company to a private company. Under the Scale Based Regulatory Framework, Tata Sons was notified by the RBI that it was an Upper Layer NBFC nearly 2.5 years ago, that required a mandatory listing by September 2025. Today, Tata Sons wants to deregister itself from any regulatory oversight of the RBI as well. As a result, the corporate governance standards and scrutiny over one of the largest NBFCs in the country is sought to be substantially diluted.”
Flagging a potential conflict of interest issue, he said Venu Srinivasan is both on the board of the RBI as well as Tata Sons.
“You should look into this potential conflict of interest and address it as it raises public concern, when all other companies notified by the RBI as being an Upper Layer NBFC have complied with the listing requirements,” MP Tangella Uday Srinivas said in the letter to the RBI governor.
MP Porika Balram Naik also raised the same issues in his seperate latter to the RBI governor saying that the RBI rules mandate an Upper Layer NBFC to list within three years from the date of their categorisation as NBFC. He also flagged the ‘conflict of interest’ issue.
“Tata Sons Private Limited have surprised all the corners of financial segment by the way of their application dated March 28, 2024, expressing their desire to surrender their certificate of registration (COR) submitted before the central regulator,” Naik said in his letter to the RBI.
He said the presence of a common director, Venu Srinivasan, in both the institutions undoubtedly gives rise to a situation of ‘conflict of interest’, particularly when the decision on the Tata Sons’ application for the surrender of the COR is due.
Their concerns echo an earlier plea from Janata Dal (United) MP Kaushalendra Kumar, who sought the intervention of Finance Minister Nirmala Sitharaman on the issue.
In September 2022, the RBI classified Tata Sons among 15 NBFCs in the Upper Layer, requiring them to list their shares on a recognised stock exchange within three years and adhere to stricter regulations for at least five years. The recent application to surrender its NBFC status has raised concerns that Tata Sons may be seeking to escape these obligations, potentially weakening regulatory oversight and corporate governance standards in India’s financial sector.
Meanwhile, Shapoorji Pallonji Group, Tata Sons’ largest minority shareholder with an 18 per cent stake, has formally opposed the company’s move to deregister and avoid listing, raising concerns with regulators and the government.
Currently, over one crore shareholders own equity in several listed Tata companies, including Tata Steel, Tata Motors, Indian Hotels, Tata Consumer, and Tata Chemicals.
These companies invested in Tata Sons via a rights issue in 1996, yet their holdings remain illiquid and recorded at book value. The conservative estimated value of these investments exceeds Rs 2.5 lakh crore, with Tata Chemicals’ stake in Tata Sons surpassing its own market capitalisation.
