After rejecting Tata Sons' application to surrender its NBFC registration, RBI files a caveat in Bombay HC

After rejecting Tata Sons application to surrender its NBFC registration the Reserve Bank has filed a caveat in the Bombay High Court in an attempt to ensure that it is heard before any order is passed in the matter by the judiciary in the highstakes battle sources said on MondayThe RBIs rejection of the March 2024 application compels the holding company to list on the bourses and many parties including the Tata Trusts its largest shareholder owning over twothirds is reluctant to go for the listingIn a scenario when any petitioner approaches the court the caveat ensures that the central banks side is heard before any order including even a stay on the order is passedWhen contacted neither RBI nor Tata Sons respondedThe board of Tata Sons is expected to meet as per schedule on Thursday and sources said any legal challenge to the RBI order can come only after the board meetsThe central bank ended monthslong suspense by rejecting Tata Sons plea after which it is classified as an upperlayer nonbank finance company NBFC and must listThe development comes as the USD 170 billion Tata Sons is still facing leadership challenges and a divided board which led chairman N Chandrasekaran to opt out of reappointment when his term ends in February next yearIt is a divided house even among the shareholders with the Noel Tataled Tata Trusts a string of nonprofits holding over 65 per cent of Tata Sons being reluctant to list while Shapoorji Pallonji Group its largest private shareholder with around 18 per cent holding is publicly pushing for the group to listAccording to experts a listing will compel the group to be more transparent about all its affairs including capital allocation and investor pressure will lead to demands for financial returns making longterm bets difficultAs per news reports the issue of listing the business was also among the reasons which led Noel Tata to vote against the reappointment of Chandrasekaran The halfbrother of Ratan Tata who chairs Tata Trusts and is a member of the Tata Sons board wanted a commitment from Chandrasekaran to ensure that Tata Sons is not forced to list while the latter is learnt to have opined that the outcome of a regulatory or legal matter cannot be ascertainedOther issues flagged by Noel Tata included the losses being incurred by the groups other businesses including Tata Digital and Air India which were either launched or acquired during Chandrasekarans nearly decadelong stint at the helmThe RBI released a list of 15 entities classifying them as Upper Layer NBFCs and mandating them to list by October 2025 Earlier this year it had expanded the list to include governmentrun NBFCs as well and also announced that any NBFC with over Rs 1 lakh crore of assets will automatically qualify as an upperlayer NBFCHowever a decision on Tata Sons plea to surrender its core investment company NBFC license was kept pending and the RBI brass repeatedly parried a clear answer regarding Tatas listingTata Sons which has assets of over Rs 175 lakh crore reportedly underwent major changes to prevent a listing including a deleveraging exerciseThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever