The Reserve Bank of India’s latest FAQs on non-banking financial companies (NBFCs) have provided additional clarity on regulatory provisions relevant to Tata Sons’ unsuccessful attempt to exit the core investment company (CIC) framework.

The RBI classified Tata Sons as an upper-layer NBFC in September 2022 and required it to list within three years. After Tata Sons became debt-free, the company applied in 2024 to surrender its CIC registration. The RBI rejected that request in September 2026.

The updated FAQs explain that a CIC is primarily engaged in holding investments in group companies. At least 90% of its net assets must be invested in specified instruments of group companies, while the entity must have an asset size of at least ₹100 crore and accept public funds under the applicable framework.

The RBI has also reiterated the principal business test used to determine whether a company is required to register as an NBFC. Under the 50-50 test, more than half of total assets must comprise financial assets, while more than half of gross income must come from financial assets.

Another clarification concerns public funds. These can include public deposits, inter-corporate deposits, bank finance, commercial paper and debentures. The RBI also considers funds received indirectly through associates or group entities that have access to such funding.

The clarification is relevant to Tata Sons because several Tata group companies raise funds through banks and capital-market instruments. As a result, being debt-free at the Tata Sons level may not alone determine its regulatory status.