President Approves REC-PFC Merger to Create Power Sector Lending Giant

Honorable President of India Droupadi Murmu has approved the merger of a REC Limited with the Power Finance Corporation (PFC). This decision comes after nearly seven years after the PFC acquired the Government of India’s 52.63% stake in the REC for ₹14,500 crore in 2019. This merger is expected to create stronger public sector financial institution which is dedicated to supporting the India’s energy and infrastructure sectors.

Why Is the REC-PFC Merger Significant?

The approval of the merger marks the important step in the government’s broader strategy to consolidate the public sector financial institutions and improve their efficiency.

Once it implemented all assets, liabilities, rights and obligations of REC will be transferred to the PFC.

After the merger process, REC will cease to exist as the separate legal entity under the provisions of Sections 230-232 of the Companies Act, 2013.

How Did the Merger Proposal Evolve?

The merger proposal has its roots in the March 2019 when PFC has acquired the Government of India’s majority stake of around 52.63% in REC for ₹14,500 crore.

Since then, both the institutions have worked closely as major financiers of the India’s power sector.

In the Union Budget 2026, Respectable Finance Minister Nirmala Sitharaman has also announced the plans to restructure PFC and REC to achieve greater scale and efficiency among public sector NBFCs.

On 16th May, 2026 the REC’s Board of Directors has reserved the merger proposal pending approval from the President of India which has now been granted.

What Will Be the Impact on the Power Sector?

This merger is expected to create India’s one of the largest power sector-focused to financing institutions.

Potential benefits includes the,

• Improved the operational efficiency.
• Better utilization of financial resources.
• Stronger lending capacity for the power projects.
• Reduced duplication of functions.
• Enhanced support for the energy transition initiatives.
• Greater financial strength for infrastructure financing.

About Power Finance Corporation

• The Power Finance Corporation was incorporated on 16th July, 1986.
• It is the Schedule-A Maharatna Central Public Sector Enterprise (CPSE) and it is one of the India’s leading Non-Banking Financial Companies (NBFCs).
• PFC operates under the administrative control of the Ministry of Power.
• The registered office of the company located in New Delhi and had the regional offices in Mumbai and Chennai.
• It was granted the Maharatna status in October 2021.
• Also in the year 2010 RBI has classified PFC as an Infrastructure Finance Company (IFC) on 28th July, 2010.