Tata Trusts propose merging 2 operating firms into Tata Sons to shed NBFC, CIC status and stay private

In a major development on Monday evening, the Tata Trusts, which own 66% of Tata Sons Private Limited (TSPL), proposed a strategic reorganisation of the group's holding company that would mean it no longer qualifies as a non-banking financial company (NBFC) or a Core Investment Company (CIC) under the Reserve Bank of India rules.

Under the plan, Tata Electronics Systems Solutions Private Limited (TESS) and Tata Consulting Engineers (TCE) would be merged into Tata Sons and, as a result, the combined company would earn most of its income from operating businesses rather than financial assets. In doing so, Tata Sons will come out of the upper layer NBFC or NBFC-UL ambit and will no longer be subject to RBI’s mandated listing deadline for such non-banks.

At a select media briefing held at the Tata Trusts administrative office at the World Trade Centre, Farokh N Subedar, advisor to Tata Trusts, said the proposal from Tata Trusts chairman has been sent to N Chandrasekaran, chairman of Tata Sons, today evening. A copy of the proposal has also been sent by the Trusts to the Reserve Bank of India.

The Trusts said the change is not a new direction for Tata Sons. According to Subedar, Tat Sons has had operating businesses and revenues for close to 80 of its 100 years, and used that income to fund newer ventures. He mentioned that Tata Consultancy Services was a division of Tata Sons until it was demerged into a separate subsidiary in 2004, and said other operating businesses had followed the same path.

“The reorganisation would return Tata Sons to its earlier model, running its own operations while remaining the holding company for the Tata Group,” said Subedar.

The makeover to operating company

Based on figures as of March 31, 2026, the Trusts said the new merged entity would have operating revenues of ₹105,043 crore, or 64.3% of total income, well above its income from financial assets of ₹40,072 crore. Hence, it will no longer meet the "principal business criteria" that define an NBFC.

Following the merger, the company’s net assets would be ₹200,158 crore, of which investments in group companies would be ₹177,120 crore. “That is below the 90% threshold that makes a company a CIC,” said Subedar.

Since Tata Sons is currently an NBFC, merging the two operating companies will see it follow the Reserve Bank of India (Non-banking Financial Companies—Voluntary Amalgamation) Directions, 2025. This includes getting a prior no-objection certificate from the central bank. Once the reorganisation is complete and TSPL is no longer a CIC, it will have to surrender its RBI certificate of registration.

The Trusts said the proposed structure complies with applicable laws and keeps the Tata Sons’ operating structure intact.

The proposal comes against the backdrop of RBI's scale-based regulations. Under those rules, large NBFCs classified in the "upper layer" must list their shares, and Tata Sons has long sought to stay privately held.