Will N. Chandrasekaran brief Tata Sons board on RBI NBFC upper-layer deregulation, SP Group exit on June 12?

While the reappointment of N. Chandrasekaran as chairman of Tata Sons for a third term remains the main subject of public discussion, investors are closely watching whether he will address two key issues raised by Tata Trusts chairman Noel Tata in February.

Noel Tata had sought clarity on the efforts to secure deregulation of Tata Sons from the Reserve Bank of India's (RBI's) upper-layer NBFC classification, as well as an update on plans to facilitate the exit of the group's largest minority shareholder, the SP Group, which has long expressed its desire to monetise its stake.

"In the May 26 board meeting, Chandrasekaran asked the CEOs of Tata Electronics, Tata Digital, and Air India to present their capital requirements and growth plans. This was in response to the concerns raised by Noel Tata on its losses at the February meeting. The two major issues that remain to answer are the efforts to keep Tata Sons private and the exit of the SP Group. Both of which he is expected to address," said sources familiar with the matter.

At the February board meeting, Chandrasekaran informed directors that the management had taken all necessary steps by submitting an application to the RBI seeking deregulation. He also highlighted the reduction of liabilities, including repayment of about ₹20,000 crore in debt, to avoid a mandatory listing requirement under existing regulations.

"The group chairman has not publicly articulated his position on keeping Tata Sons private. Therefore, he is expected to respond to the questions raised by Noel Tata during the February meeting," said a person close to the developments. "That remains the missing link," he added.

However, other sources pointed out that Chandrasekaran heads one of India's largest and most diversified conglomerates and is under no obligation to make a public statement on the matter. "It is ultimately his choice. He cannot be compelled to make such a declaration," one of them said.

The RBI is yet to respond to Tata Sons' application for deregulation. According to sources, the central bank has maintained a neutral stance so far and has not conveyed any adverse observations on the proposal.

Noel Tata is understood to favour retaining Tata Sons as a privately held company, arguing that such a structure helps preserve the philanthropic objectives of Tata Trusts without creating funding constraints. Tata Sons has also been able to support group companies financially and bridge funding gaps when required, a flexibility that some believe could be affected if the holding company were to be listed.