The Boards of Directors of REC Limited and Power Finance Corporation Limited (PFC) have granted in-principle approval to proceed with a proposed merger of the two public sector non-banking financial companies (NBFCs). The move follows the announcement made in the Union Budget 2026–27, which outlined the Government of India’s intent to enhance scale, efficiency, and impact in the public sector NBFC space.
During the Budget presentation, the Finance Minister underscored the role of NBFCs in achieving the objectives of Viksit Bharat, setting ambitious targets for credit expansion and technology adoption. As a first step toward strengthening public sector financial institutions, the restructuring of PFC and REC was proposed to improve operational efficiency and consolidate lending capacity in the power and infrastructure sectors.
At their respective meetings held on 6 February 2026, the Boards of PFC and REC noted that the proposed restructuring would involve the formulation of a detailed merger scheme in compliance with applicable laws, regulatory frameworks, and approval processes. Once finalized, the scheme will be submitted to the relevant statutory and regulatory authorities for consideration and approval.
In regulatory filings, both companies have clarified that the merged entity will continue to be classified as a “Government Company” under the provisions of the Companies Act, 2013, ensuring continued public sector character and oversight.
PFC currently holds a 52.63 percent equity stake in REC, following the acquisition of the Government of India’s shareholding in REC in 2019, positioning it as the majority shareholder.
Further information regarding the merger structure, integration roadmap, and implementation timelines is expected to be disclosed after the completion of the approval process. The proposed merger is aimed at creating a stronger, more efficient financial institution to support India’s growing power and infrastructure financing needs.
