By Enersider Desk | New Delhi
The boards of directors of REC Ltd and Power Finance Corporation Ltd (PFC) have granted in-principle approval to proceed with a proposed merger of the two public sector non-banking financial companies, in line with the announcement made in the Union Budget 2026–27.
In her Budget speech, the Finance Minister had said that restructuring of PFC and REC was proposed as a first step to achieve scale and improve efficiency among public sector NBFCs, in the context of credit expansion and technology adoption under the Viksit Bharat initiative.
In regulatory filings dated February 6, 2026, both companies said the proposed restructuring would involve the formulation of a detailed merger scheme in accordance with applicable laws and regulatory requirements. The scheme will be placed before the relevant authorities for necessary approvals once finalised.
REC and PFC also said that the merged entity would continue to be classified as a “Government Company” under the provisions of the Companies Act, 2013.
Further details regarding the merger structure, integration process and implementation timelines will be disclosed after completion of the approval process.
PFC currently holds a majority stake of 52.63 per cent in REC, following its acquisition of the Government of India’s shareholding in REC in 2019.
PFC and REC are key financiers of India’s power sector, providing long-term funding for generation, transmission and distribution projects.
Both institutions primarily focus on lending to power generation, transmission, and distribution projects, while also maintaining exposure to infrastructure and logistics as part of their diversification strategy.
A merger could result in a larger and more efficient financial entity with enhanced scale and financial flexibility, though the exact structure and operational framework of the integration are yet to be clarified.
