Mumbai: Within days of rejecting Tata Sons' application for voluntary surrender of its certificate of registration (CoR), the Reserve Bank of India (RBI) Wednesday detailed FAQs that define what financial activity as a principal business is and what is a core investment company (CIC) for a non-banking finance company (NBFC). Such companies automatically come under the central bank's regulatory purview.
The central bank's rejection of the surrender plea has effectively shortened the odds in favour of a listing of Tata Sons, which is the unlisted holding company for the Tata Group of companies.
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The RBI said that a company is deemed to be engaged in a financial activity as a principal business when its financial assets constitute more than 50% of total assets, and income from financial assets make up more than 50% of the gross income.
If the companies are engaged in agricultural operations, industrial activity, purchase and sale of goods, providing services or purchase, sale or construction of immovable property as their principal business and are doing some financial business in a small way, they will not be regulated by the RBI, the central bank said.
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The RBI said that in case a single group has four to five prospective CICs with an aggregate asset size of more than ₹100 crore, all companies in the group that are CICs would be required to obtain a CoR from the central bank.
In case there are prospective CICs with an aggregate asset size of more than ₹100 crore and one of the entities has raised / holds public funds, only that entity will be registered provided it is not funding any of the other CIC, either directly or indirectly.
In cases where an NBFC voluntarily seeks to become a CIC since it brings clarity to the holding structure in their organization, it would have to apply to the RBI with full details of the plan and exemptions on capital adequacy and exposure norms could be considered on a selective basis on the merits of the case.
The RBI has also clarified that in cases where a company is not fulfilling the principal business criteria like 50% of total assets being financial assets and the income derived from these assets crossing half the gross income, it is not required to register as an NBFC.
In a letter dated September 11, 2026, the RBI had said that, after considering Tata Sons' application dated March 28, 2024, and subsequent correspondence, it could not accede to the request for voluntary surrender of the CoR. Tata Sons was advised to take necessary action to ensure full compliance with all guidelines and instructions applicable to NBFC-Upper Layer (UL) entities, which includes enhanced regulatory scrutiny and mandatory public listing.
Tata Sons had total assets of ₹2.01 lakh crore as of March 31, 2026, more than twice the threshold defined for inclusion in the NBFC-UL category.
