RBI NBFC FAQs offer clarity on rules relevant to Tata Sons' de-registration

RBI's latest NBFC FAQs clarify definitions of CICs, principal business and public funds, shedding light on regulatory issues relevant to Tata Sons' failed deregistration bid

Days after rejecting Tata Sons’ request for exemption from the core investment company (CIC) category —  a move that effectively mandates a public listing for the salt-to-software giant — the Reserve Bank of India (RBI) issued new non-banking financial company (NBFC) FAQs. The guidelines shed light on the regulatory principles driving the central bank’s refusal to let Tata Sons deregister as an NBFC.

 

RBI, in a letter to Tata Sons, said that after examining all aspects of its application for voluntary surrender of the CIC category, it found that “it cannot be acceded to”.

 

The banking regulator classified Tata Sons as an upper-layer NBFC in September 2022, asking it to list on the stock market within three years. However, Tata Sons has remained unlisted even after the September 2025 deadline passed. In 2024, Tata Sons applied to the RBI to surrender its certificate of registration as a CIC after becoming debt-free. In August 2026, the RBI again placed Tata Sons on the list of upper-layer NBFCs. Back then, the RBI had said that Tata Sons’ inclusion in the list was “without prejudice” to the final outcome of the pending application.

 

 

Now, it seems the RBI’s decision not to allow Tata Sons to deregister as an upper-layer NBFC in the CIC category stems from three things: The definition of CIC; the definition of principal business of an NBFC; and the definition of public funds in the case of a CIC.

 

The RBI’s FAQs reiterate that a CIC is a category of NBFC primarily engaged in holding investments in group companies. To qualify as a CIC, at least 90 per cent of its net assets must be invested in equity or preference shares, debt or loans of group companies. The entity must also have an asset size of at least Rs 100 crore and accept public funds.

 

This places Tata Sons in the CIC category as it is the principal investment holding company and promoter of the Tata group, with core equity stakes in major group companies including TCS, Tata Motors, Tata Steel, Tata Power, Tata Chemicals, Titan, Trent and Indian Hotels, among others.

 

The RBI has also reiterated the criteria used to determine whether a company is required to register as an NBFC. Under the so-called 50-50 test, more than 50 per cent of a company’s total assets, net of intangible assets, must comprise financial assets, while more than 50 per cent of its gross income must come from financial assets. The RBI is empowered under the RBI Act, 1934, to register, regulate, supervise and inspect companies that meet these principal business criteria.

 

Another clarification in the RBI’s updated directions relates to the definition of “public funds”, which is relevant to determining whether an entity falls within the CIC framework. The RBI has said public funds include public deposits, inter-corporate deposits, bank finance and funds raised through instruments such as commercial paper and debentures. It has also clarified that indirect receipt of public funds refers to funds received through associates or group entities that have access to such funds. This could be relevant in the case of Tata Sons, given that several Tata group companies raise funds through bank borrowings, debentures, commercial paper and other market instruments. Thus, the fact that Tata Sons itself is debt-free may not, by itself, settle the question of whether it has indirect access to public funds through group entities.

 

The RBI clarified that while public funds include public deposits, CICs and other non-deposit-taking NBFCs are not permitted to accept public deposits.