Tata Trusts Propose Merger to Escape RBI Listing Mandate

Tata Trusts, which hold a 66% stake in Tata Sons, have proposed merging two operating companies with the Tata Group's holding company in a move aimed at taking Tata Sons out of the Reserve Bank of India's regulatory framework for non-banking financial companies and core investment companies, potentially allowing it to remain unlisted.

The Trusts have asked the Tata Sons board to consider merging Tata Electronics Systems Solutions Pvt Ltd (TESS) and Tata Consulting Engineers (TCE) with Tata Sons and to seek a prior no-objection certificate from the RBI for the proposed restructuring, reported PTI.

Following a 2022 assessment, the Reserve Bank of India (RBI) categorised Tata Sons as an upper-layer non-banking financial corporation (NBFC), a designation that necessitates stricter regulatory oversight, including mandatory listing. Undeterred, Tata Sons subsequently petitioned for an exemption from the framework. However, the RBI denied its request in September, leaving the company to navigate the listing conundrum.

The proposed structure is intended to ensure that Tata Sons no longer meets the regulatory criteria for either an NBFC or a CIC. The, Trusts said. the merger would have to comply with the RBI's Non-Banking Financial Companies - Voluntary Amalgamation Directions, 2025.

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This includes the requirement for a prior no-objection certificate from the central bank.

The proposed merger offers an alternative route: instead of complying with the framework applicable to an NBFC/CIC. Tata Sons would seek to alter its business and asset profile so that it no longer falls within those categories. The Trusts have consistently opposed listing Tata Sons.

As the succession of Tata Sons' leadership hangs in the balance, a contentious issue has also come to the forefront, one that threatens to upend the company's future trajectory. N Chandrasekaran, who has helmed the entity since 2017, is facing a potentially decisive test of his tenure, with the Trusts having initially backed him for a third five-year term - a decision that has since soured over fundamental disagreements on key matters.

This includes the fate of Tata Sons' ownership and listing status.

Chandrasekaran announced in August that he would not offer himself for another term when his tenure ends in February 2027. However, the situation changed on September 17, when the Tata Sons board voted to give Chandrasekaran another five-year term.

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Based on figures as of March 31. 2026, the reorganised entity would have operating revenue of Rs 1,05,043 crore, accounting for 64.3 per cent of its total income. Income from financial assets would stand at Rs 40,072 crore.

The Tata Sons reorganisation plan revives a long-forgotten structure, one that once placed operating businesses under the parent company's umbrella. This arrangement, once the norm, was abandoned in 2004 when Tata Consultancy Services was spun off as a distinct subsidiary. This marked a significant shift in the conglomerate's organisational landscape.

The Trusts, chaired by Noel Tata since October 2024, have pledged to collaborate with the RBI on all facets of the reorganisation plan. The, Trusts said. the proposed amalgamation and consequential steps are in line with regulatory compliance requirements and the unanimous resolutions passed by the Boards of Sir Dorabji Tata Trust and Sir Ratan Tata Trust in July 2025.