REC-PFC Merger Gets RBI NoC; ₹11 Lakh Crore Power Financing Giant Moves Closer
REC and PFC are key sources of funding for India's electricity infrastructure, supporting projects across power generation, transmission, distribution and renewable energy
The proposed merger of REC Limited with Power Finance Corporation (PFC) has crossed a key regulatory milestone, with the Reserve Bank of India (RBI) issuing a conditional No Objection Certificate (NoC) for the transaction on October 15.
REC disclosed the development in a regulatory filing to the stock exchanges, stating that the NoC was received subject to the instructions and conditions specified by the RBI. The clearance advances the consolidation of the two government-owned power sector lenders, although the merger is not yet complete.
The proposed merger is expected to create a financing entity with a combined loan book exceeding ₹11 lakh crore, significantly expanding the scale of public sector financing for India’s power industry.
Shareholders to Get 88 PFC Shares for Every 100 REC Shares
Under the merger scheme approved by the boards of both companies in June 2026, shareholders of REC will receive 88 fully paid-up equity shares of PFC for every 100 equity shares of REC, each with a face value of ₹10.
The record date for determining eligible shareholders will be announced by the companies at a later stage.
The proposed amalgamation is being pursued under Sections 230–232 and other applicable provisions of the Companies Act, 2013.
Merger Still Requires Further Approvals
The RBI’s NoC is an important step, but it does not mean the transaction has been completed. The merger remains subject to other applicable statutory and regulatory approvals, fulfilment of the conditions specified in the scheme, and the requisite approvals of shareholders and creditors, wherever required.
The companies must also ensure that the merged entity continues to qualify as a government company under the Companies Act, 2013, with the Government of India retaining majority voting rights and control, directly or indirectly.
A Major Restructuring of Public Sector Power Finance
The proposed merger is part of the government’s broader effort to consolidate public sector non-banking financial companies (NBFCs) and improve scale and operational efficiency in power-sector financing.
REC and PFC are key sources of funding for India’s electricity infrastructure, supporting projects across power generation, transmission, distribution and renewable energy.
The creation of a single financing entity with a loan book of more than ₹11 lakh crore could strengthen its capacity to finance large infrastructure requirements. The eventual impact, however, will depend on the terms of integration, regulatory compliance and the implementation of the merger scheme.
For now, the RBI’s NoC marks a significant step forward, with the remaining approvals and procedural requirements determining the timeline for completion.
