India's largest conglomerate Tata Group is being forced by the Reserve Bank of India into a $120bn listing it does not want, potentially opening some of the country's most valuable closely held companies to rivals and raiders.

The Reserve Bank of India rejected an appeal by software-to-Range Rover maker Tata for an exemption from rules requiring it to list its holding company. A listing may value Tata Sons at more than $120bn, according to analyst estimates, which would make it India's largest-ever initial public offering.

It would profoundly transform the ownership and governance of the renowned Mumbai-based business house, which has remained closely held for more than a century. But it would be a major blow for Noel Tata, chair of the charitable trusts that control the group and a scion of the founding family, who has resisted an IPO.

The disagreement over whether to list was a crucial factor in a boardroom feud this year, which culminated in long-serving Tata Sons chair N Chandrasekaran announcing last month he would step down at the end of his term next February. Senior executives and foreign investors in India have long complained about what they say is the increasingly arbitrary nature of regulation in the country.