The dispute concerning the future trajectory of Tata Sons gained a new angle as attention turned to the roles of two prominent directors, Venu Srinivasan and N Chandrasekaran, on the Central Board of the Reserve Bank of India. While both held positions as non-official RBI directors, their terms in office did not run concurrently.
Chandrasekaran held a seat on the RBI Central Board spanning from March 2016 through March 2022, having assumed the chairmanship of Tata Sons in January 2017. Srinivasan took up his role on the RBI Central Board in June 2022, with his tenure extending to August 2026. The RBI evaluated Tata Sons’ operations during this period.
RBI Decision Puts Tata Sons On Listing Path
The regulatory matter arises from the central bank’s scale-based classification system for non-banking financial companies. The RBI designated Tata Sons as an upper-layer NBFC in September 2022, subjecting such institutions to stricter regulatory mandates, which include a requirement to list publicly.
In response, Tata Sons attempted to return its registration certificate to function as an unregistered Core Investment Company. This application was turned down by the RBI on September 11, leaving the firm obligated to follow the mandated regulatory standards.
This ruling amplified discussions over whether Tata Sons ought to stay private or move toward an initial public offering. Nonetheless, records show no indication that the RBI appointment of either director impacted the central bank’s subsequent rulings regarding the company. Tata Sons additionally noted that Chandrasekaran completed his RBI tenure prior to the commencement of the upper-layer NBFC categorization procedure.
Board Backs Listing, Noel Tata Opposes
During a September 17 meeting, the board of Tata Sons resolved to move forward with preparations for a public offering. This initiative received votes in favor from Venu Srinivasan, Harish Manwani, Anita M George, and Saurabh Agrawal, whereas Noel Tata, chairman of Tata Trusts, voted against it.
Additionally, the board approved another five-year mandate for Chandrasekaran. Noel Tata also dissented on this measure and has subsequently raised concerns regarding the protocol utilized during the session.
This conflict carries weight because Tata Trusts hold a combined 66% stake in Tata Sons. Despite this, Srinivasan—who serves concurrently as a director at Tata Sons and a trustee for Tata Trusts—voted in favor of the public listing. Noel Tata stated that the enterprise ought to investigate permitted alternatives to bypass a public share offering.
Also Read: RBI Rate Hike May Hurt Select NBFC Segments, Not Whole Sector: Report
