Why Tata Sons should not be forced by RBI in a public listing

Copyright © HT Digital Streams Limit all rights reserved. RBI must reconsider its rules instead of pushing Tata Sons to become public and listing its shares that Tata Sons have been caught in the RBI’s regulatory split stick, although it is not for its own fault. (Reuters) Summary With the deadline of the stock list that passed, the tension hangs over the future of Tata Sons ownership status. It is time for a reconsideration of the RBI rule that has driven the Tata group’s holding business in this close place. That is why it should be rationalized. If the Reserve Bank of India’s (RBI) monetary policy of October is people and businesses looking for a rate cut, saves it for Tata Sons, the Tata group’s business. It is trapped in the RBI’s regulatory split stick, although it is not for its own mistake. The private firm was defined by RBI rules as a core investment business (CIC) and is thrown as a non-banking financing company (NBFC) in the ‘top layer’; As RBI rules are mandate, businesses in this category must change their ownership status by going public and listing their shares on a stock market. The deadline for this was September 30th. While Tata Sons applied for a change in classification more than a year ago, RBI gave no indication of how this matter could be resolved in its statements of October 1, which covered to liberalize the rules for borrowers, NBFCs included. Predictably, RBI’s radio silence over the status of Tata Sons raised questions about the future at the press conference after the policy. Governor Sanjay Malhotra offered no direct answer, given an age-old RBI policy not to talk about company-specific issues. However, after being printed, he said that “an entity that has a registration until it is not canceled will continue to do its business.” Although it can be read in any case, it indicates an RBI ominennis to resolve which is apparently a confused policy. It is now very clear that Tata Sons find itself in this problem because of RBI’s regulatory overreaction. It has also been noted that RBI typically extends rules in response to an offense or offense by a player (or group working together), and its scope is often excessive. This regulatory pattern has indeed prevailed in India’s financial services sector decades. The dodgy actions of a single perpetrator invite the clamps. An example is the burden of compliance placed on retail banking clients after Know-Your-Customer norms were abused by a few crooks. It was the collapse in 2018 of an infra financing business, IL & FS, who acted as a CIC with many of its subsidiary units that do not have their loans, which led RBI to tighten rules for all CICs, including TATA’s holding company. Ironically, although Tata Sons are a big player who is considered ‘systematically important’, it does not seem to be a significant risk to set up a system-wide solvency crisis through effects on its financial links web. Unlike typical NBFCs, the basic business is not to borrow money for lending-and it has reportedly imposed its debt in a safe zone-but rather to keep shares in Tata firms and help finance it. If a solvency gap arises in some way, it would play much less infection risks than in the case of a widely linked non-bank lender in financial problems. This is not to say that RBI is not prepared to review its policy. The policy statement of October 1, in his honor, accompanied by a number of regulatory changes to support the ease of doing business; Among other things, this has facilitated a few rules that previously tightened it, such as the captain of the exposure of borrowers to large corporate borrowers. The ominous saga of the status of Tata Sons deserves a similar unbundling. The group’s holding company is not only a deepened member of India Inc., but also a fellow traveler on India’s curve of investment -driven growth. The country’s central bank must rationalize its rules and give Tata boys the space he needs to best utilize the business energy. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #tata Sons #nbfcs #rbi Read Next Story