New Delhi: In a landmark move for India’s power financing sector, state-owned REC Limited has received Presidential approval for its proposed merger with Power Finance Corporation (PFC). The approval was conveyed by the Ministry of Power on June 10, 2026, marking a major step toward the consolidation of two leading public sector NBFCs.
Ministry of Power Confirms Competent Authority Approval
According to REC Limited’s regulatory filing under Regulation 30 of SEBI (LODR) Regulations, the Ministry of Power has officially communicated that the competent authority has approved the proposed amalgamation of REC into PFC.
The approval follows earlier disclosures made on May 16, 2026, when both companies’ boards decided to reserve the merger proposal for the approval of the Hon’ble President of India.
Merger Structure: REC to Be Merged into PFC
The proposed transaction will be carried out under Sections 230–232 of the Companies Act, 2013.
Key highlights of the merger structure include:
- REC will be fully merged into PFC
- A share exchange ratio will be determined by independent valuers
- All assets and liabilities of REC will be transferred to PFC
- REC will cease to exist after completion of the merger
- PFC will remain the surviving entity
A key condition of the merger is that the combined entity will continue to maintain its status as a Government Company during and after the process.
Strategic Consolidation in Power Financing Sector
The merger is part of a broader government-led restructuring initiative aimed at strengthening public sector financial institutions. The process was initiated following proposals in the Union Budget 2026.
Earlier developments include:
- In-principle approval by PFC’s board on February 6, 2026
- Cabinet Committee on Economic Affairs (CCEA) clearance
- Government stake restructuring discussions initiated after PFC acquired the Centre’s 52.63% stake in REC in 2019
The combined entity is expected to create a stronger and larger NBFC focused on power and infrastructure financing.
Ownership and Structural Considerations
Analysts have highlighted that post-merger government ownership in the combined entity may fall below the 51% threshold unless further capital restructuring or infusion is undertaken. The final share swap ratio and merger scheme are expected to address this concern.
Regulatory Disclosure and Compliance
The announcement was made through a formal filing by REC Limited to stock exchanges under SEBI regulatory requirements. The disclosure was signed by Dinesh Garg, Company Secretary and Compliance Officer of REC Limited.
Impact on India’s Power Financing Ecosystem
Both REC and PFC are Maharatna-level public sector NBFCs that play a crucial role in financing:
- Power generation projects
- Transmission and distribution infrastructure
- Renewable energy expansion
- Large-scale infrastructure development
The merger is expected to improve operational efficiency, strengthen lending capacity, and enhance financial stability in the power sector.
About REC Limited
REC Limited is a Maharatna public sector enterprise under the Ministry of Power that provides financial assistance for power sector projects across India, including generation, transmission, and distribution infrastructure, as well as renewable energy initiatives.
About Power Finance Corporation
Power Finance Corporation is a leading non-banking financial company (NBFC) under the Government of India that primarily finances power sector projects, supporting infrastructure development, capacity expansion, and clean energy initiatives across the country.
