PFC-REC merger gets presidential nod
Power Finance Corporation Limited (PFC) and REC Limited have received the approval of the Hon’ble President of India for the proposed merger of REC into PFC, according to regulatory filings made by both companies.
The Ministry of Power, through a letter dated June 10, 2026, communicated the approval of the competent authority for the proposed amalgamation.
The merger proposal forms part of a government-led restructuring initiative for public sector non-banking financial companies (NBFCs) announced in the Union Budget 2026 under the “Viksit Bharat” framework.
Board approvals
On May 16, 2026, the boards of both companies had decided to reserve the merger proposal for the approval of the Hon’ble President of India.
Earlier, on February 6, 2026, PFC’s board had granted in-principle approval for the merger.
Merger structure
The proposed transaction will be carried out under Sections 230–232 of the Companies Act, 2013. Under the proposed structure, REC will be fully merged into PFC, with PFC remaining the surviving entity. All assets and liabilities of REC will be transferred to PFC, and REC will cease to exist after completion of the merger.
The combined entity will continue to maintain its status as a Government Company during and after the merger process.
Background
PFC and REC are both Maharatna NBFCs under the Ministry of Power, focused on financing India’s power and energy infrastructure. PFC was established in 1986; REC (formerly Rural Electrification Corporation) in 1969.
In March 2019, the Government of India sold its 52.63% stake in REC to PFC for approximately Rs 14,500 crore through an inter-public sector undertaking (PSU) transfer. PFC financed the acquisition through borrowings from public sector banks and the bond market.
In 2022, the government restored REC’s CPSE and government-company status through a policy clarification without changing the shareholding structure. REC continued to operate as a subsidiary of PFC.
Ownership implications
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 issue.
