Tata Sons applied in March 2024. The regulation that defeated it was written in 2026. Either the answer was always no, or the answer was made no.
The Rule That Arrived After the Application
Tata Sons applied in March 2024. The regulation that defeated it was written in 2026. Either the answer was always no, or the answer was made no.
On 11 September, the Reserve Bank of India rejected Tata Sons’ application to surrender its registration as a core investment company. The application had been filed on 28 March 2024 and had sat for twenty-nine months.
Little needs to be said about the applicant. A house of 158 years, a million people employed, no deposits, no outside lending, debt-free before it applied, and two-thirds owned by public charitable trusts.
What follows is not about the Tatas. It is about what happens to an application while nobody decides it.
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A simple question about dates.
In September 2022, the Reserve Bank published its first list of Upper Layer NBFCs. Two names on it were holding companies of large industrial groups: Tata Sons and Shanghvi Finance, the investment arm of the Sun Pharma promoter. Both were told to list within three years.
Both did the same thing. They repaid their debt.
Shanghvi Finance cleared its loans and surrendered its registration on 9 February 2023. The RBI cancelled it. With effect from 17 May 2023 it became an unregistered core investment company, outside the framework. It dropped off the next Upper Layer list. Roughly three months, start to finish. No reasons were published.
Tata Sons repaid over ₹21,000 crore, became debt-free, and applied on 28 March 2024 to surrender its registration. Same route. Same regulator. Same list.
Now follow what happened while that application sat.
29 April 2026 — the definition changes. The RBI introduces “indirect receipt of public funds”: money received not directly, but through group entities that themselves have access to public funds. It expressly refuses to exclude equity from a group company’s own funds, holding that leverage, layering and the fungibility of money make the source impossible to establish.
24 June 2026 — the test changes. The scoring methodology is replaced by a flat rule. Assets of ₹1 lakh crore or more, and you are Upper Layer. No assessment. No judgment.
30 June 2026 — the exit route changes. A circular on voluntary surrender of registration, referring back to the April amendments.
11 September 2026 — the answer arrives. The application is rejected. The ground given is that deregistration requires, among other things, assets below ₹1,000 crore. Tata Sons has ₹2.01 lakh crore.
Read that last line again, because it forks two ways and both are troubling.
If the ₹1,000 crore test was already in force in March 2024, then the answer was no on the day the application was filed. It took the regulator twenty-nine months to say a word it already knew.
If it was not in force in March 2024, then the rule that defeated the application was written after the application was made.
There is no third possibility.
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Who pays for the wait.
I am not alleging design. I am making a narrower point, and every practitioner will recognise it.
Tata Sons can absorb twenty-nine months. No debt, no covenant falling due, no lender asking questions. It waited, and the waiting cost it nothing but optionality.
Almost nobody else is in that position. The promoter whose restructuring turns on one approval. The founder whose investor has a long-stop date. The family settlement that cannot be executed until a classification is confirmed. For them, twenty-nine months is not delay. It is refusal, delivered without the inconvenience of writing one.
And when a rule can change while your application is pending, no lawyer can advise you with confidence. I have spent thirty years telling clients what the law is and what will follow if they do X. That advice is worth something only if the law governing the answer is the law that existed when the question was asked. Take that away and we are not advising. We are guessing, expensively.
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And what do we tell the world?
On 25 August, in Tokyo, our commerce minister led a two-hundred-member delegation. Japanese financial institutions told him plainly what they wanted: greater regulatory predictability for long-term investors. He welcomed the feedback and reiterated the government’s commitment to ease of doing business. He also assured them, invoking Jack Ma, that in India a successful businessman won’t disappear and become a professor.
On 3 September, in New York, our finance minister told a roundtable convened with Bank of America that India’s reform orientation had delivered greater regulatory certainty.
On 11 September, the Reserve Bank rejected an application it had held for twenty-nine months, applying rules it had written in the twenty-eighth.
Seventeen days.
I have spent three decades bringing foreign capital into this country — Dozens of MNCs from US, Canada, Germany, UK, France, Japan – Not one of them ever asked me whether India’s growth rate was high. They asked one question, always, and in every language: if we apply, will we get an answer, and will the rule be the same when it comes?
That is what ease of doing business means. Not a rate of growth. Not a ranking. The certainty that the goalpost stands where it stood when you took the shot.
So the question is not for the Reserve Bank, which owes reasons and has given none.
It is for the ministers who stood in Tokyo and New York three weeks ago.
If this is how the oldest, cleanest, most legible corporate structure in India is dealt with — what precisely is the message you wish the world to take?
— Nitin
• • •
Connecting Dots
— every fortnight, I take a deal, a policy, or a person and tell you the thinking behind it. Insights and instincts.
I’m a corporate and M&A lawyer in Mumbai. For three decades I’ve advised global companies and their boards on coming into India, on joint ventures, and on mergers and acquisitions, and I still do. Busy as that keeps me, I always make time for younger professionals — through this letter, and through my conversations with law students — because staying close to young minds keeps me learning. If something here struck a chord, write back. I read every reply.
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