PFC and REC Boards Approve In-Principle Merger to Strengthen Power Sector Financing

New Delhi, February 12, 2026: The Boards of Power Finance Corporation Limited (PFC) and REC Limited (REC) have accorded in-principle approval for a merger of the two entities, following the Union Budget announcement on February 1, 2026, aimed at consolidating public sector NBFCs for scale and efficiency.

The proposed merger will create a single, focused institution to cater to the evolving financing needs of India’s power sector, while ensuring that the merged entity continues to remain a Government company under the Companies Act, 2013.

Background:
PFC acquired a 52.63% equity stake in REC in 2019, making REC its subsidiary. The new merger is a continuation of the government’s strategy to consolidate financial institutions serving the power sector and strengthen India’s energy financing ecosystem.

Expected Synergies:
The merged entity is projected to benefit from enhanced balance sheet strength, operational efficiencies, and improved credit flow. It will support large-scale funding in renewable energy, green hydrogen, CCUS, small modular nuclear reactors, and energy storage solutions, positioning it as India’s largest power sector financer.

Key Aspects:

• Government Entity Status: The merged company will remain under Government control, including board appointments.

• Merger Implementation: External consultants, valuation experts, and legal advisors will ensure a structured and compliant merger process.

• Lending and Borrowing: The combined entity will operate within RBI norms for single and group borrower exposures, maintaining comfortable capital levels and borrowing headroom.

This strategic consolidation is expected to create a robust, future-ready NBFC, enhancing India’s capability to fund power sector growth and emerging technologies.