Tata Sons Plans To Merge Various Investment Arms

In order to obtain an exemption from being labelled as a top-layer non-banking financing company (NBFC), Tata Sons, the investment holding company of the Tata Group of Companies, plans to merge numerous wholly-owned investment subsidiaries with itself.

According to people familiar with the matter, the action will help the group in avoiding the submission of the audited financial information required under the NBFC Upper Layer, which went into effect in September 2022, for each subsidiary and step-down subsidiary.

If allowed, this would be the first time Tata Sons merged investment firms with itself. These are still in the planning phase. They said that by doing this, the amount of financial data that needs to be submitted to the regulators would be reduced, but they would not reveal the identities of the investment firms that will merge with Tata Sons.

All Tata group companies are promoted by Tata Sons, which serves as their primary investment holding company.
The Tata group's philanthropic trusts, the largest of which are Sir Dorabji Tata Trust and Sir Ratan Tata Trust and which promote livelihood generation, art, and culture, health, and education, hold around 66% of the equity in Tata Sons.

A representative of the company declined to respond when approached. Tata Sons was classified as an upper-layer NBFC under RBI standards. This necessitates that the business adhere to NBFC regulations, which call for the hiring of a chief compliance officer among other things.

The Upper Layer was previously classified by the Reserve Bank of India (RBI) as NBFCs that were expressly designated by RBI based on a set of parameters and scoring system. According to the framework, the top 10 NBFCs in terms of asset size must always be located in the Upper Layer.
There were 16 businesses on the RBI's list of NBFCs subject to scale-based regulation as of September 30, 2022. These included, among others, LIC Housing Finance, Bajaj Finance, Shriram Transport Finance Company, Tata Sons, and L&T Finance.