Tata Sons Faces IPO Uncertainty With RBI Deliberating On CIC Surrender Plea

Tata Sons has submitted its application to surrender its core investment company registration this year, the Reserve Bank of India confirmed, responding to a Right to Information Act query last week.

The application for the surrender of certificate of registration by Tata Sons was submitted on March 28, 2024. "The application submitted by Tata Sons for surrender of COR as a CIC is under examination," read the response to the RTI filed by activist Ajit Chandradeo Singh.

This has come as Tata Sons, classified as a CIC under the Reserve Bank of India's Scale-Based Regulation framework, is expected to list by September 30, 2025.

According to the rules laid down by the regulator, upper-layer NBFCs are expected to list within three years of the list being created.

Tata Sons' application to surrender its CIC status is seen as a potential way to sidestep the RBI's regulations, which will allow the company to remain private.

In 2022, the RBI introduced scale based regulation framework, which imposes stricter governance and transparency norms on systemically important non-banking financial companies.

Bankers are of the view that Tata Sons would require six to eight months to prepare for an IPO. On the other hand, experts have warned that organizing an IPO of this scale would typically require at least six to eight months, leaving Tata Sons with a narrowing window for compliance.

If the RBI accepts the company's proposal to surrender as CICI, the company would be exempted from listing norms, bypassing the governance and transparency requirements mandated for listed companies.

So far, Bajaj Finance, L&T Finance and LIC Housing Finance have stepped up their efforts to comply with the RBI's listing norms.