The Tata Trusts, which hold a 66% stake in Tata Sons Pvt Ltd, have proposed a strategic reorganisation of the group holding company, under which Tata Sons would become a non-banking financial company (NBFC) or a core investment company (CIC). The proposal involves merging Tata Electronics Systems Solutions Pvt Ltd (TESS) and Tata Consulting Engineers (TCE) with Tata Sons, effectively bringing operating businesses and their revenues back into the holding company.
In a statement on Monday, the Tata Trusts said the proposed restructuring would comply with applicable laws while preserving the operating structure of the Tata group and, importantly, the status of Tata Sons as an unlisted private company.
The Trusts have written to the Tata Sons board asking it to consider and approve the proposal and take the necessary steps, including seeking a no-objection certificate (NOC) from Reserve Bank of India (RBI).
On 11 September 2026, RBI, while rejecting an application, directed Tata Sons to comply with the regulations governing upper-layer non-banking finance companies (NBFCs). The regulator subsequently filed a caveat before the Bombay High Court, a procedural step that would ensure the RBI is heard before any court considers an application relating to the matter.
In its latest statement, Tata Trusts said it, along with Tata Sons, will engage with RBI on all aspects of the proposed restructuring.
The proposed merger is designed to change the financial profile of the resulting Tata Sons entity sufficiently to take it outside the regulatory definitions of both an NBFC and a CIC.
According to the Tata Trusts, the amalgamated entity would have had operating revenues of ₹105,043 crore as of 31 March 2026. This would be substantially higher than its income from financial assets of ₹40,072 crore, with operating revenue accounting for 64.3% of total income.
The Trusts said the resulting entity would therefore not meet the principal business criteria applicable to an NBFC.
It would also fall outside the conditions for classification as a CIC. The proposed entity would have aggregate net assets of ₹200,158 crore, of which investments in group companies would account for ₹177,120 crore. According to the Trusts, that would put investments in group companies below the 90% threshold relevant to CIC classification.
The proposed restructuring would consequently mean that Tata Sons would no longer operate under the CIC framework.
The restructuring, however, requires regulatory clearances. The Tata Trusts said the merger of operating, non-financial companies such as TESS and TCE with Tata Sons would have to be carried out under the RBI's Non-Banking Financial Companies - Voluntary Amalgamation Directions, 2025.
That process requires a prior NOC from the central bank. Once the proposed reorganisation is completed and Tata Sons ceases to qualify as a CIC, the company would also have to surrender its certificate of registration, according to the Trusts.
The Trusts said the proposed arrangement is a regulatory-permissible route for reorganising Tata Sons and would be in the interests of the Tata group and its stakeholders.
The proposed restructuring also marks a return to an earlier model of Tata Sons, according to the Trusts.
For much of its history, Tata Sons was not simply a holding company but also housed operating businesses that generated revenues and helped finance newer ventures within the group.
The Trusts pointed out that Tata Consultancy Services (TCS), now a separately listed Tata group company, was still a division of Tata Sons as recently as 2004, before it was demerged into a separate subsidiary.
Other operating businesses were similarly housed within Tata Sons at different points in the group's history.
The proposed merger of TESS and TCE would, therefore, restore an operating component to Tata Sons while leaving it as the holding company of the wider Tata group.
The Trusts said this would also be consistent with RBI's earlier classification of Tata Sons, after 2004, as a 'non-banking, non-financial company'.
The restructuring proposal comes against the backdrop of Tata Sons' regulatory status and the requirement to comply with the RBI framework applicable to large investment holding structures.
The Tata Trusts said the proposed route is also consistent with unanimous resolutions passed by the boards of the Sir Dorabji Tata Trust and Sir Ratan Tata Trust in July 2025.
Those resolutions called for all necessary efforts to ensure that Tata Sons remains an unlisted private company.
The Trusts said the proposed reorganisation would help preserve what it described as the Tata group's distinctive organisational structure, while allowing the group to pursue long-term strategic initiatives.
Tata Sons sits at the centre of the Tata group and holds stakes in several major Tata companies. The Tata Trusts collectively hold about 66% of Tata Sons, giving them a controlling position in the holding company.
The proposal is not yet a completed restructuring. The Tata Trusts have asked the Tata Sons board to consider the plan and initiate the regulatory process. The proposed merger will require the necessary approvals, including RBI's no-objection certificate, before it can be implemented.
The Trusts said they would work with Tata Sons in discussions with RBI on the proposed reorganisation.
If approved and implemented, the merger of TESS and TCE with Tata Sons would give the holding company significant operating revenues alongside its investments in Tata group companies. The resulting structure, according to the Trusts, would take Tata Sons outside both the NBFC and CIC regulatory categories while allowing it to remain an unlisted private company.
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