Lok Sabha Member of Parliament (MP) Kaushalendra Kumar has called for government intervention in the alleged ongoing controversy surrounding Tata Sons' attempt to bypass the Reserve Bank of India’s (RBI) public listing requirement.

In a letter to Union Finance Minister Nirmala Sitharaman the four time MP has requested to look into the matter as it may adversely impact the image of Government of India and institutions like RBI.

Tata Sons, the holding company of the Tata Group, was classified as a systemically important entity under the RBI’s Scale-Based Regulation (SBR) framework in September 2023. This classification mandates the company to list its shares publicly.

However, reports suggest that Tata Sons is seeking to deregister itself as a Non-Banking Financial Company (NBFC), effectively avoiding the public listing requirement.

In the past some analysts have raised concerns that this move could set a dangerous precedent and undermine the transparency and governance objectives of the SBR framework. A legal notice was also sent to RBI by an individual early this month.  

Complicating the matter is the dual role of Venu Srinivasan, the Vice Chairman of Tata Trusts and a director at Tata Sons, who also serves as a director at the RBI. Critics argue that Srinivasan’s influence in both entities could create a conflict of interest, potentially impacting regulatory decisions in favor of Tata Sons.

In response to these concerns and citing reports in the media, the MP in the letter said "Government should ensure the integrity of the RBI’s regulatory processes and prevent any undue influence from corporate interests." The MP's call for intervention highlights the need for fairness and transparency, especially when it comes to the regulation of systemically important entities like Tata Sons.

This case is seen as a critical test for the RBI’s commitment to maintaining a robust and transparent financial system. The outcome will have significant implications for future regulatory oversight and governance standards for large financial entities in India.