MUMBAI: Reserve Bank of India has rebuffed calls to raise the asset threshold for upper-layer NBFCs to Rs 2.5 lakh crore, sticking to Rs 1 lakh crore threshold—a decision that keeps Tata Sons, the holding company of India’s largest conglomerate, firmly within its supervisory bracket and subject to listing requirements.Industry stakeholders had argued that the threshold should be set at Rs 2.5 lakh crore or higher, with complementary objective metrics of profitability and asset quality to better reflect systemic importance. Had the higher bar prevailed, Tata Sons — whose standalone assets stood at Rs 1.75 lakh crore in FY26 — would have fallen outside the upper-layer classification altogether.The RBI was unmoved. The Rs 1 lakh crore-and-above threshold, it said, has been fixed based on the current profile of the NBFC sector and an analysis of the financial profile of existing upper-layer entities.
Dismissing the argument that asset size alone may not fully capture systemic importance, the RBI said its analysis showed that size remains a “reasonably good proxy” for systemic significance, adding that the Rs 1 lakh crore threshold better captures NBFCs whose failure could threaten financial stability amid sector growth.However, it says that the classification will not be automatic and will follow RBI identifying the upper layer NBFCs from the companies that meet this threshold.The central bank has clarified that compliance requirements for upper-layer NBFCs will be triggered only from the date on which it notifies such a list. Tata Sons was first classified as a UL-NBFC by the RBI in Sept 2022, triggering a listing requirement. The company has since repaid debt and applied to surrender its NBFC registration to avoid listing — an application still under review by the RBI.The Tata Sons board is divided on the IPO, with Tata Trusts-nominated director Noel Tata opposing a listing, while fellow trust-nominated director Venu Srinivasan is in favour. Tata Trusts is the principal shareholder of Tata Sons.The RBI also reiterated that the classification trigger will be applied strictly on a standalone audited balance sheet basis, not on consolidated group accounts, reinforcing an entity-level approach to supervision. It further said it would reduce the review cycle for the threshold from five years to three, signalling a more dynamic calibration process as NBFC balance sheets grow and financial interlinkages deepen.The RBI also stated that “case-specific exemptions go against a principle-based regulatory regime” — a comment made in relation to PSU NBFCs, but one that experts believe could have ramifications for Tata Sons application to surrender its NBFC registration.
