The Reserve Bank of India (RBI) has cleared the conversion of Tata Capital into an NBFC – Investment Credit Company (ICC) from an NBFC – Core Investment Company (CIC) after Tata Capital, a subsidiary of Tata Sons, merged Tata Cleantech Capital and Tata Capital Financial Services with itself, as per Tata Capital filings with the regulators.
This is an important milestone for the company, which announced the merger of Tata Motor Finance Ltd (TMFL), a subsidiary of Tata Motors Finance Holdings, with itself in June this year and is looking for a possible listing.
The appointed date for the scheme is effective April 1 this year and is expected to take 9-12 months to consummate. As 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, based on the no-objection certificate (NOC) received from the RBI for the scheme, the company was operating as an NBFC-ICC and complying with the guidelines applicable to an NBFC-ICC. “The company has now received the certificate of registration as an NBFC-ICC,” the filing said.
Tata Capital did not comment on the issue.
The financial services business has become important for Tata Sons, which has infused capital of Rs 6,097 crore in TCL in the last five fiscals, including a tranche of Rs 2,003 crore during fiscal 2024, indicating the intent of the group to step up its focus on the retail lending business.
For the fiscal year ended March 2024, 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 fiscal 2024, as per its filings.
First Published: Aug 13 2024 | 6:48 PM IST
