RBI clears Tata Capital's conversion into NBFC investment credit company

The appointed date for the scheme is effective April 1 this year and is expected to take 9-12 months to consummate

The Reserve Bank of India (RBI) has cleared the conversion of financial and investment services provider Tata Capital Limited (TCL) into a non-banking finance company (NBFC)–investment credit company (ICC) from a NBFC–core investment company (CIC). This comes after Tata Capital merged Tata Cleantech Capital and Tata Capital Financial Services (TCFS) with itself, according to Tata Capital's filings with the regulators.
 

Sector trackers say this assumes significance as besides a change in nomenclature, the Tata Sons subsidiary has become more of an operating company ahead of its possible listing. This is compared to its earlier status as a holding company in a CIC structure. The company had announced the merger of Tata Motors Finance Ltd (TMFL), a subsidiary of Tata Motors Finance Holdings, with itself in June this year.
 

The scheme is effective April 1 this year and is expected to take 9-12 months to consummate. As a consideration, TCL will issue its equity shares to the shareholders of TMFL resulting in Tata Motors effectively holding a 4.7 per cent stake in the merged entity through TMF Holdings.

 

Last year, the RBI had tagged Tata Capital and its parent Tata Sons Pvt as NBFC–upper layer, thus making it mandatory for both companies to list by September next year. While Tata Sons has reduced its net debt to zero, Tata Capital has merged all finance businesses under itself and has sought the change of certification from the RBI.
 

In its filings, Tata Capital said that after the merger of Tata Cleantech and TCFS, it had made an application to the RBI for converting itself into an NBFC-ICC and in the interim, basis the NOC (no-objection certificate) received from the RBI for the scheme, the company was operating as an NBFC-ICC and complying with the guidelines applicable to NBFC-ICC. “The company has now received the certificate of registration as an NBFC-ICC,” the filing said.
 

A Tata Sons spokesman declined to comment while an email to Tata Capital sent on Monday remained unanswered.
 

The financial services business has become an important vertical for the group with Tata Sons infusing Rs 6,097 crore in TCL in the last five financial years, including a tranche of Rs 2,003 crore during FY24, indicating the intent of the group to step up its focus on the retail lending business.
 

For the FY24, TCL reported total assets of Rs 1.76 trillion. The firm also reported a total income of Rs 8,630 crore and profit after tax of Rs 3,327 crore in FY24, according to its filings.