The Hindu Business Line : Tata Sons forms new financial services arm

The new company proposes to operate in the areas of capital market services, merchant banking, housing finance, private equity investments, assets and vehicle financing, retail finance and other related areas, said a statement from Tata Sons.

These activities would be undertaken either by subsidiary companies or divisions of Tata Capital depending on regulatory requirements, it said.

The group has existing financial services companies such as Tata AIG Insurance, Tata Asset Management Company (which manages the Tata Mutual Fund) and Tata Investment Corporation.

Tata Sons has a substantial direct holding in all of these; and they will continue to remain separate entities and function as at present, said the statement.

The new financial services entity is a re-entry of sorts by the Tata group into financial services encompassing a broader range of activities, after Tata Finance Ltd ceased to exist, following its merger into Tata Motors in 2005.

Tata Finance was rocked by scandal and financial losses following irregularities on the part of its then Managing Director, Mr Dilip Pendse. It was merged into Tata Motors mainly to preserve the vehicle financing business. Its employees were also absorbed into Tata Motors.

The Tata group held that its direct business model would find synergy with the dealer-driven business of the Bureau of Hire Purchase and Credits (BHPC), a division of Tata Motors. Subsequently, this division became a subsidiary TML Financial Services.

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