New Delhi, Sept. 17 -- Tata Sons Pvt. is said to have approved going public and asked Chairman Natarajan Chandrasekaran to stay on for five more years, as one of India's biggest business houses tries to keep leadership steady through the transition.

The board proposed heeding the Reserve Bank of India's directive on pursuing a listing, according to people familiar with the matter. The directors also asked Chandra, as he's widely known, to stay on to steer the sprawling group, the people said, asking not to be identified discussing internal company matters.

Shares of Tata Group stocks surged. Tata Chemicals Ltd. shares jump as much as 13%, while Tata Motors Passenger Vehicles Ltd. gained 4.7%.

Chandra last month said he plans to leave w...