By ANI | New Delhi | 29 June 2026
The boards of state-owned Power Finance Corporation (PFC) and REC Ltd have approved a scheme for the merger of REC into PFC, creating what the companies said would be a significantly larger financing institution for India’s power and infrastructure sectors, subject to regulatory, shareholder and creditor approvals.
In separate exchange filings on Saturday, both companies said their boards had approved the scheme of merger by absorption under Sections 230 to 232 of the Companies Act, 2013, under which REC will merge into PFC as the transferee company.
According to the approved scheme, REC will be dissolved without being wound up upon the merger becoming effective, while eligible REC shareholders will receive 88 equity shares of PFC for every 100 equity shares of REC held on the record date. The companies said the merger would take effect from the appointed date specified in the scheme.
In a joint press release, the companies said the proposed transaction would create “a financing entity with an aggregate loan book of over Rs 11 lakh crore.”
REC said the scheme remains subject to “the necessary regulatory and other approvals” and will be filed with the stock exchanges for obtaining their no-objection letters under the SEBI Listing Regulations.
Explaining the rationale, REC said the merged entity “would emerge as the Government’s principal institution for implementing power sector reforms and flagship programmes” while benefiting from “improved balance sheet strength, stronger capital base, and higher operational efficiencies.” The company added that the combined entity would be better positioned to finance renewable energy, green hydrogen, energy storage, small modular nuclear reactors and grid modernisation, besides strengthening borrowing capacity and improving credit flow across the power sector.
The companies also said the share exchange ratio was determined on the basis of a joint valuation report prepared by Ernst & Young Merchant Banking Services LLP and RBSA Valuation Advisors LLP, supported by a fairness opinion from Nuvama Wealth Management Ltd.
Separately, REC’s board also approved a proposal to raise up to Rs 1.40 lakh crore through private placement of secured or unsecured non-convertible bonds or debentures in one or more tranches over a one-year period, subject to shareholder approval at the ensuing annual general meeting.
The joint press release said the merger is contingent on approvals from shareholders, creditors and relevant regulatory authorities, and on the merged entity continuing to qualify as a government company with the Government of India retaining majority voting rights and control.
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