Tata Sons may seek similar relief from RBI as Shanghvi Finance: Lawyers

Tata Sons Pvt Ltd, the holding company of the Tata group, may argue for the same regulatory relief that the Reserve Bank of India (RBI) granted to Shanghvi Finance Pvt Ltd, the investment arm of Sun Pharmaceutical Industries promoter Dilip Shanghvi, to remain private after the central bank declassified the latter from its “upper-layer” non-bank lender category in 2023 following payment of the company’s debt, said top corporate lawyers.

- DEV CHATTERJEE

Tata Sons, the holding company of India’s largest conglomerate, was grouped with Shanghvi Finance in the RBI’s 2022 list of “upper-layer” non-banking financial companies (NBFCs). The classification required upper layer NBFCs to list their shares by September 2025.

While Tata Capital, the group’s financial arm, listed earlier this month to comply with the directive, its parent Tata Sons has applied to remain privately held after the Tata group holding company repaid all outstanding debt and formally requested the RBI to declassify it as an upper-layer NBFC. The RBI's decision on Tata Sons’ application is currently pending.

Shanghvi Finance had repaid short-term loans totalling ₹341 crore in 2021-22 (FY22), and cleared the remaining promoter loans of ₹538 crore by December 2022, according to a statement by Care. Shanghvi Finance owns around 40 per cent stake in Sun Pharma, and a similar stake in Sun Pharma Advanced Research Company. After repaying its loans, Shanghvi Finance surrendered its NBFC licence on February 9, 2023, which the RBI later cancelled. Effective May 17, it became an unregistered Core Investment Company (CIC), which, under RBI norms, cannot access public funds.

‘Tata Sons, meanwhile, repaid ₹20,642 crore in FY23 to become a net debt-free company before seeking declassification as an NBFC, according to its annual report.

Emails sent to Tata Sons, Tata Trusts, and the RBI seeking comments on the story didn’t elicit any response.