Power Finance Corporation and REC Ltd. have moved towards consolidation in India’s power financing space, with their respective boards approving a merger scheme that will combine the two state-run non-banking financial companies into a single entity.
The decision was cleared at a board meeting held on June 28, 2026, following recommendations from the audit committee and the committee of independent directors, PFC said in a regulatory filing. The proposed scheme provides for the merger of REC into PFC through an absorption route, subject to requisite approvals.
Under the plan, REC will be merged into PFC, with the former set to be dissolved without undergoing the process of winding up. Shareholders of REC will receive equity shares of PFC based on a pre-determined exchange ratio of 88 PFC shares (face value Rs 10 each) for every 100 REC shares (face value Rs 10 each), held as of the record date.
The amalgamation, once completed, is expected to create a significantly larger lending institution with a combined loan book exceeding Rs 11 lakh crore. The move is seen as part of a broader effort to strengthen financing capacity for India’s power sector while improving operational efficiency and reducing overlaps between the two companies.
Both PFC and REC are key financiers of power infrastructure projects across generation, transmission and distribution segments. While they have traditionally operated with some overlap, the merger is expected to bring scale advantages, streamline funding operations, and enhance access to capital markets.
The scheme has been proposed under Sections 230 to 232 of the Companies Act, 2013, along with other relevant provisions, including those under the Income Tax Act and SEBI’s Listing Obligations and Disclosure Requirements regulations. The companies have clarified that the merger remains subject to multiple approvals, including those from shareholders, creditors, and regulatory authorities.
“The Scheme is conditional upon and subject to… approvals from the respective shareholders and creditors of both the companies, and all relevant regulatory and governmental authorities,” PFC noted in its filing.
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