The Reserve Bank of India (RBI) has approved the merger of Tata Capital, an unlisted entity, with Tata Motors financial (TMFL), creating India's 12th largest non-banking financial company.
According to the companies' regulatory filings, the RBI issued its "no-objection" to both earlier this month.
Tata Capital would issue equity shares to TMFL shareholders as part of the merger agreement, giving Tata Motors a 4.7% ownership in the amalgamated business.

The merger was approved by the Competition Commission of India in September. According to a legal source, the approval of the banking regulator is essential to advancing the merger process.

The RBI's permission is critical for the company, which is likely to list its shares in September next year, following the regulator's earlier order that all non-banking financial organizations classed as upper layer must list their shares by September 2025.

As of March 31, 2024, Tata Sons, the Tata Group's parent company, directly owned 92.83 percent of Tata Capital's equity shares, with the majority of the remaining interest held by other Tata Group companies and trusts. Tata Capital's merger intends to acquire new consumers in the fast developing commercial vehicle and passenger automobile financing markets. The company intends to improve customer service through digital products, while also providing unique career chances for its employees.