New Delhi: The Power Finance Corporation Limited (PFC) has taken a significant step toward its proposed merger with REC Limited, approving the process to seek formal clearance from the Hon’ble President of India.
The decision was taken at a Board of Directors meeting held on May 16, 2026, where the proposal for merging REC into PFC was reserved for presidential approval, marking a key milestone in one of the most significant public sector restructuring exercises under discussion in India’s power finance ecosystem.
CMD Authorised to Seek Presidential Approval
The PFC Board has authorised Chairman and Managing Director Parminder Chopra to formally approach the President of India for approval of the proposed merger.
The merger will proceed based on a share exchange ratio, which will be determined by independent valuers appointed for the transaction.
Key Approvals and Structural Decisions
The Board approved several critical actions, including:
- Reserving the merger proposal of REC into PFC for Presidential approval
- Authorising submission of formal application for government clearance
- Appointment of independent valuers to determine share exchange ratio
- Ensuring the merged entity retains “Government Company” status
- Allowing capital infusion or issuance of securities if required by the Centre
The Board meeting lasted 25 minutes, beginning at 3:00 PM and concluding at 3:25 PM.
Post-Merger Structure: REC to Cease to Exist
Once the merger becomes effective under the Companies Act, 2013:
- All assets and liabilities of REC will be transferred to PFC
- REC Limited will stand dissolved under Sections 230–232 of the Companies Act
- PFC will become the surviving entity of the consolidation
The trading window for PFC securities will remain closed until further notice for designated persons and their relatives.
Government Ownership and Capital Concerns
Currently, the Government of India holds:
- ~55.9% in PFC
- ~52.6% in REC
Analysts have noted that post-merger, government ownership in the combined entity may fall below the critical 51% threshold unless additional capital infusion or restructuring is undertaken.
The Board has therefore included provisions to ensure continued government control through possible capital support or issuance of securities.
Strategic Push for PSU Consolidation
The proposed merger is being viewed as part of a broader effort to:
- Strengthen balance sheets of power sector financiers
- Improve lending capacity for infrastructure projects
- Streamline PSU operations under the Ministry of Power
If approved, the merger would create one of the largest power financing institutions in India.
About Power Finance Corporation (PFC)
Power Finance Corporation Limited (PFC) is a leading financial institution in India specializing in funding and supporting the power sector. Headquartered in New Delhi, PFC plays a crucial role in financing power generation, transmission, and renewable energy projects across the country. It is a Schedule A public sector undertaking under the Ministry of Power.
About REC Limited
REC Limited is a Maharatna Central Public Sector Enterprise under the Ministry of Power, Government of India. The company plays a pivotal role in financing and promoting power sector infrastructure, including generation, transmission, distribution, and renewable energy projects, supporting India’s long-term energy security and sustainable development goals.
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