The Reserve Bank of India (RBI) has rejected Tata Sons' proposal to buy back shares currently owned by its Japanese joint venture partner NTT DOCOMO at a price of Rs 58.045 per share. The RBI has stated that the proposed share price of Rs 58 per share is above their fair market value. The central bank is of the view that the proposal is not in conformity with the Foreign Exchange Management Act (FEMA). The RBI had earlier sought the finance ministry’s view on the matter before eventually denying permission to Tata Sons to pay a higher price.

This move comes after Tata Sons expressed its willingness to buy back shares at a premium price, since the fair value of NTT’s stake in DOCOMO was lower than 50 per cent of the investment made by the latter to buy stake in TTSL. As per the original agreement between the two entities in 2008-09, Tata was required to buy back shares from NTT DOCOMO at current market price or 50 per cent of the acquisition price, whichever is higher, if the former fails to achieve key milestones. Tata Sons had therefore written to the RBI seeking special dispensation.

Earlier, in January 2015, NTT DOCOMO filed an arbitration case in London against the Tata Sons on grounds that the latter had failed to honour its commitment to arrange a buyer for its 26.5 per cent stake in TTSL, or buying it back itself.