Following the rejection of Tata Sons' request to be exempted from the category of a Company engaged in Investments (CIC)—which effectively requires a public listing for the giant that produces everything from salt to software—the Reserve Bank of India (RBI) has issued new Frequently Asked Questions (FAQ) for Non-Banking Financial Companies (NBFCs).
These guidelines shed light on the regulatory basis for the central bank's refusal to allow Tata Sons to deregister as an NBFC.
In a letter addressed to Tata Sons, the RBI stated that after examining all aspects of the application for voluntary withdrawal from the CIC category, it was determined that 'it is not possible to satisfy'.
The banking regulator classified Tata Sons as a top-tier NBFC in September 2022, requiring the company to go public within three years. However, Tata Sons remained unlisted even after the deadline of September 2025. In 2024, Tata Sons applied to the RBI to withdraw its registration certificate as a CIC after becoming debt-free. In August 2026, the RBI re-included Tata Sons in the list of top-tier NBFCs. At that time, the RBI stated that the inclusion of Tata Sons in this list was done 'without prejudice' to the final decision on the pending application.
Clarification of Criteria
It now appears that the RBI's decision not to allow Tata Sons to deregister as a top-tier NBFC in the CIC category is based on three factors: the definition of CIC; the definition of the core business of an NBFC; and the definition of public funds in the case of a CIC.
The RBI's FAQ confirms that a CIC is a category of NBFC primarily involved in holding investments in group subsidiaries. To meet CIC requirements, at least 90 percent of net assets must be invested in shares or preference shares, debt instruments, or loans of group subsidiaries. Furthermore, the organization must have assets of at least 100 crore rupees and accept public funds.
This places Tata Sons in the CIC category because it is the principal investment holding company and promoter of the Tata Group, holding major equity stakes in large group subsidiaries, including TCS, Tata Motors, Tata Steel, Tata Power, Tata Chemicals, Titan, Trent, and Indian Hotels, among others.
The RBI also reiterated the criteria used to determine whether a company needs to register as an NBFC. According to the so-called 50/50 test, more than 50 percent of the company's total assets, excluding intangible assets, must consist of financial assets, and more than 50 percent of gross income must come from financial assets. The RBI is authorized under the RBI Act 1934 to register, regulate, control, and inspect companies meeting these core business criteria.
Another clarification in the updated RBI directives concerns the definition of 'public funds,' which is relevant to determining whether an organization falls under the scope of a CIC. The RBI stated that public funds include public deposits, interbank deposits, bank financing, and funds raised through instruments such as commercial papers and bonds. It also clarified that indirect receipt of public funds refers to funds obtained through affiliates or corporate groups that have access to such funds. This may be relevant in the case of Tata Sons, given that several Tata Group companies raise funds through bank loans, bonds, commercial papers, and other market instruments. Thus, the mere fact that Tata Sons is debt-free cannot resolve the issue of whether it has indirect access to public funds through corporate groups.
The RBI explained that although public funds include public deposits, CICs and other NBFCs that do not accept deposits are not entitled to accept public deposits.
