Tata Trusts has proposed a restructuring of Tata Sons that could change its regulatory classification and allow the Tata Group holding company to remain privately held, following the Reserve Bank of India’s recent decision on its status.
The Trusts, which hold a 66% stake in Tata Sons, have proposed merging Tata Electronics Systems Solutions (TESS) and Tata Consulting Engineers (TCE) with Tata Sons. The plan would give Tata Sons significant operating businesses and revenues alongside its existing role as the group’s holding company.
Tata Sons was classified as a Core Investment Company, or an “upper-layer” non-banking financial company, in 2022. The classification brought it under stricter RBI supervision and regulatory requirements. Earlier this month, the RBI rejected Tata Sons’ request to exit its NBFC status and directed the company to comply with the applicable framework.
According to Tata Trusts, the proposed merger would return Tata Sons to an operating model similar to its earlier structure. The Trusts said the company was classified by the RBI as a “non-banking, non-financial company” after 2004, when it still had operating businesses of its own.
The proposed combined entity would have operating revenues of ₹1.05 trillion as of March 31, 2026. Tata Trusts said income from financial assets would account for ₹400.72 billion, or 64.3% of the total income of the merged entity. The Trusts believe the resulting structure would not meet the principal business criteria for an NBFC or the conditions applicable to a Core Investment Company.
The proposal has been submitted to the Tata Sons board for consideration. If approved, the merger would also require a prior no-objection certificate from the RBI under the applicable voluntary amalgamation rules. Tata Sons would subsequently need to surrender its CIC registration if the restructuring results in it no longer meeting the relevant classification.
The proposal comes amid differences between Tata Trusts and the Tata Sons board over the company’s future structure, including the question of a potential stock-market listing and the reappointment of Chairman N Chandrasekaran. Tata Trusts has previously said that all alternatives to listing should be examined.
Tata Trusts said the proposed restructuring is intended to preserve Tata Sons’ long-standing organisational structure while meeting applicable regulatory requirements. The plan will now depend on the response of the Tata Sons board and the RBI.
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