Should Tata Sons be listed? A banker’s perspective
Exploring the debate on whether Tata Sons should be listed, focusing on regulatory requirements, corporate governance, long-term ownership benefits, and the impact on minority shareholders and systemic risk.
By VS Radhakrishnan The question of whether Tata Sons should be listed has acquired fresh importance following recent regulatory developments. Much of the discussion has focused on regulation, corporate governance, ownership and the benefits of listing. There is, however, another aspect worth examining — what role does an ultimate holding company play when one of the businesses within a large group faces prolonged difficulties?
A listed holding company has clear advantages — market price, liquidity, a wider shareholder base and continuous investor scrutiny. At the same time, a focused and committed long-term owner can sometimes take decisions that may not look attractive over the next one or two years but may make sense over a much longer period. It can put in additional capital, give a business time to recover and move capital across the group when circumstances require it.
The issue is whether a strong, professionally governed unlisted ultimate holding company can provide greater flexibility in capital allocation and in absorbing an appropriate share of business risk, while maintaining the governance, transparency and accountability expected of a large institution. For a banker, the question is: when a business risk crystallises, does the loss get absorbed by the business house or find its way to lenders?
Listing — the regulatory mandate Tata Sons is classified as an NBFC in the Upper Layer under the RBI’s scale-based regulatory framework and is required to be listed within the prescribed period. In September 2026, the RBI rejected Tata Sons’ application to surrender its CIC registration. The regulatory position is therefore clear. International regulatory experience broadly focuses on controlling the risks created by a conglomerate structure, rather than eliminating the structure itself — through consolidated supervision, governance, capital and disclosure requirements.
This raises a question in the Tata Sons context: does stronger regulatory oversight necessarily require the holding company itself to be listed? Crisis behaviour — a perspective from past Tata Finance — When reputation mattered: The late-1990s NBFC crisis left a large number of small depositors facing losses. Against this backdrop, when Tata Finance faced challenges, the Tata group stepped in with about ?600 crore in cash/cash equivalents and paid all small depositors in full.
No depositor lost money. This demonstrated the value of a reputation built over many decades. Tata Tele — the Group’s loss absorber Tata Sons had infused approximately Rs 45,000 crore into Tata Tele to pay off its debts and not walk away when the business failed. The losses were absorbed by the group rather than passed on to lenders. This does not mean being unlisted created that capacity; the financial strength of the group, together with its ownership structure, made it possible.
Air India — long haul Turning around an airline is not a two- or three-year exercise. Fleet, technology, people, service standards, routes and customer experience all require sustained investment and ownership support. A focused, long-term owner may have greater flexibility to stay the course when returns may take several years to emerge. That does not mean a listed company cannot do the same. The question is how much flexibility the ownership structure provides to stay the course.
Minority shareholders and Tata Trusts Shapoorji Pallonji Group and other minority shareholders hold stakes in Tata Sons. Being unlisted limits liquidity and price discovery for these shareholders, which listing would address by providing market value and an easier route to monetise their holdings. If Tata Sons remains unlisted to preserve the advantages of a long-term ownership structure, a time-bound mechanism for liquidity or exit, supported by independent valuation and arbitration for valuation disputes, could provide an alternative for minority shareholders.
Tata Trusts’ majority ownership gives Tata Sons a distinctive ownership character. The Trusts represent a long-term interest, with a perspective that can extend beyond immediate financial returns to building businesses, creating employment, developing capabilities and contributing to nation-building. This does not make financial returns or commercial discipline less important, and majority ownership does not remove the responsibility of the Tata Sons board to act independently in the interests of the company and all its shareholders.
There are good reasons for listing operating companies, but it is worth asking whether every large business group necessarily needs its ultimate holding company to be listed. The wider question is whether India’s regulatory framework should, as in other mature regulatory jurisdictions, recognise that various business groups and ownership structures may have different strengths and risk profiles. Where an ultimate holding company demonstrates capital adequacy, professional governance and a track record of supporting its businesses through difficult periods without transferring risk to the financial system, these characteristics should form part of the regulatory assessment.
The question is not whether listing has merits — it clearly does. The question is whether listing should be the only structure for every large ultimate holding company. For Tata Sons, the case merits examination on the basis of systemic risk, governance, capital strength and long-term institutional value, rather than treating listing as an end in itself. (The author is former deputy MD, State Bank of India) Disclaimer: The views expressed are the author's own and do not reflect the official policy or position of Financial Express.
