The turmoil currently raging within the Tata Group is no secret. Recently, the Tata Trusts announced a plan to remove Tata Sons from the purview of the NBFC market, proposing a merger between the two companies.

Tata Trust made a new plan.

The Tata Group has been facing considerable turmoil for the past several days, and the company has been in the news for years. Meanwhile, Tata Sons has recently formulated a new plan to prevent the company from being listed on the stock exchange.

Tata Sons, the Tata Group's holding company, is preparing to be exempted from the Reserve Bank of India's (RBI) regulations governing NBFCs and core investment companies (CICs). To this end, Tata Trusts has proposed a restructuring of Tata Sons. Tata Trusts own approximately 66% of Tata Sons. The Trusts have asked the Tata Sons board to consider this proposal and initiate the necessary process.

Under this proposal, two Tata Group companies, Tata Electronics System Solutions (TESS) and Tata Consulting Engineers (TCE), would be merged into Tata Sons. The aim is to transform Tata Sons' business and financial structure so that the merged company will not be subject to regulatory requirements applicable to NBFCs or CICs. However, prior approval from the RBI will be required.

The goal is to keep Tata Sons private.
Tata Trusts has long been opposed to listing Tata Sons on the stock exchange. A key objective of the proposed restructuring is to keep Tata Sons a non-listed private company. Tata Sons already has two distinct functions: investments in group companies and business operations. This existing structure will be strengthened following the proposed merger.

Why did RBI regulations become an issue?
In 2022, the RBI differentiated Tata Sons as an "upper-layer NBFC." This imposed certain regulatory requirements on the company and made it necessary for it to be listed on the stock exchange. Tata Sons had requested to be removed from this classification, but the RBI rejected it in September.

Now Tata Trust proposes that the structure of the company should be changed in such a way that it does not fall under the definition and necessary conditions of NBFC or CIC.

Differences between the Trust and the Tata Sons Board
It should be noted that differences exist between the Tata Trusts and the Tata Sons Board regarding the listing and management of Tata Sons. The Trust, headed by Noel Tata, is attempting to keep Tata Sons unlisted. In July 2025, the two key Tata Trusts unanimously passed a resolution to continue efforts to keep the company as a non-listed private company.

Meanwhile, controversy erupted over the tenure of Tata Sons Chairman N. Chandrasekaran. He had stated in August that he would not seek another term after February 2027. Despite this, on September 17, the Tata Sons board decided to award him another five-year term. This was opposed by Noel Tata. The trust later stated that this was inconsistent with company rules.