Noel Tata suggests Tata Sons split to avoid RBI-mandated listing

Tata Trusts Chairman Noel Tata has proposed exploring a restructuring of Tata Sons, including the possibility of splitting the holding company into multiple entities, as an alternative to listing it to meet regulatory requirements, reported Economic Times.The proposal was made at the Tata Sons board meeting on September 17, the report said, citing people familiar with the matter. It was not immediately clear whether the board would take up the proposal for consideration.Tata Trusts, the majority shareholder in Tata Sons, has maintained that the holding company should remain unlisted and has been exploring alternatives after the Reserve Bank of India (RBI) rejected Tata Sons' application to surrender its registration.WHAT DOES THE PROPOSAL INVOLVE?The restructuring could potentially take different forms, including a demerger, moving assets into subsidiaries, a merger or a broader scheme of arrangement, the ET report said. Given the size of Tata Sons and its wide portfolio of businesses, such a restructuring could involve regulatory, commercial and tax complexities.Tata Sons is the holding company for several major group businesses, including Tata Consultancy Services, Tata Motors, Tata Steel, Tata Capital, Tata Communications, Tata Consumer Products, Tata Investment Corporation, Air India, Tata Digital, Tata Electronics and Agratas. The proposal comes as Tata Sons faces a regulatory requirement after being classified as an upper-layer non-banking finance company. The company had sought to surrender its registration after repaying its debt, but the RBI rejected the application.LISTING VS RESTRUCTURINGThe proposal comes amid a wider disagreement within Tata Sons over its future structure.At the September 17 board meeting, the board voted to reappoint N Chandrasekaran as Tata Sons chairman for another five years. Noel Tata opposed the reappointment as well as the move towards a listing, according to the eport.The holding company is understood to have started preparing for a potential public listing after the RBI's decision, with February 2027 emerging as an approximate internal target for a possible market debut, ET had reported earlier.Noel's latest proposal offers another route that could potentially allow Tata Sons to address the regulatory issue without listing the existing holding company.However, the proposal itself does not mean that Tata Sons has decided to split or restructure the company.SP GROUP'S EXIT REMAINS AN ISSUEA restructuring could also have implications for the Shapoorji Pallonji Group, which owns around 18.37% of Tata Sons and has been backing a listing.The SP Group's Tata Sons stake is held through Sterling Investments Corporation and Cyrus Investments and has been pledged against borrowings. The group completed a Rs 21,500-crore refinancing in July and had indicated plans to monetise part of its Tata Sons holding through a listing or share sale within 18 months, according to the ET report.A restructuring that avoids a listing may therefore leave open the question of how the SP Group would monetise its stake.The ET report quoted Harshal Anjaria, founder of Shreeyam Advisors, as saying that even if splitting Tata Sons is legally possible and avoids a listing, it may not provide a clear route for the SP Group to exit its investment. He also said any reorganisation or change in control would require prior RBI approval.IMPACT ON TATA GROUP'S CAPITAL FLOWSA restructuring could also change how Tata Sons deploys cash across the group.The holding company currently uses dividends from TCS to fund businesses that require capital. Separating businesses into different entities could disrupt that mechanism and could also lead lenders and rating agencies to reassess the level of support available to individual group companies, the ET report said.The development comes as Tata Sons' consolidated FY26 revenue rose 17% to Rs 6.61 lakh crore, while net profit fell 35.7% to Rs 17,923 crore, partly weighed down by losses at unlisted businesses including Air India, Tata Digital and Tata Electronics.For now, Noel Tata's proposal is an option being explored within the wider debate over how Tata Sons can meet RBI requirements while retaining its existing unlisted structure.SEO/AEO keywords: Noel Tata, Tata Sons, Tata Sons listing, Tata Trusts, RBI Tata Sons, Tata Sons restructuring, Tata Sons split, N Chandrasekaran, Tata Sons chairman, Tata Group, SP Group, Tata Sons IPO, Tata Sons RBI rules, Tata Sons demerger, Tata Sons news- EndsPublished On: Sep 22, 2026 10:28 IST