The Indian government has officially approved the merger of REC with Power Finance Corporation, with President Murmu granting approval on June 10, 2026. According to a regulatory filing by REC, the Ministry of Power conveyed the approval of the Competent Authority through a letter dated June 10, 2026. This follows the company's earlier intimation to the Board of Directors on May 16, 2026, regarding the decision to reserve the merger proposal for approval of the Hon'ble President of India. The merger was initially announced during the 2026-27 Budget, where Finance Minister Nirmala Sitharaman outlined the vision for NBFCs under Viksit Bharat with clear targets for credit disbursement and technology adoption. The filing also referenced compliance under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, noting that the merger decision follows earlier approvals and discussions at the government level regarding restructuring of public sector NBFCs to improve scale and efficiency.
Following the presidential approval announcement, PFC shares fell as much as 4.2% to ₹413.40 and REC dropped 3.6% to ₹336.40 in afternoon trade on Thursday, June 11, 2026. Despite the government moving closer to consolidating the two lenders, the stocks underperformed the broader market. The companies informed stock exchanges on Wednesday that the proposed merger has received presidential approval, though the final share swap ratio for the transaction has not yet been disclosed. Market participants are now awaiting clarity on this crucial detail, which is expected to be determined by independent valuers as part of the merger process. As of Thursday, PFC had a market capitalisation of more than ₹1.35 lakh crore, while REC's market value stood at over ₹88,600 crore.
The merger combines REC's expertise in power sector lending with Power Finance Corporation's broader financial services capabilities. This consolidation is expected to create a stronger entity better positioned to serve the power sector's financing needs. The Finance Minister stated that as a first step to achieve scale and improve efficiency in Public Sector NBFCs, it is proposed to restructure Power Finance Corporation and Rural Electrification Corporation. The merger process gained momentum earlier this year after PFC's board, on February 9, gave in-principle approval for the amalgamation of REC with itself. Once approved, REC's assets and liabilities will be transferred to PFC, with REC eventually being dissolved. According to the regulatory filing, upon the merger being duly approved under applicable law and made effective, all the assets and liabilities of REC will be transferred to PFC, and REC will stand dissolved in accordance with the provisions of Sections 230-232 of the Companies Act 2013. Despite the merger, PFC will continue to remain a government-owned company.
The proposed merger is expected to create one of India's largest infrastructure financiers, with a combined loan book of more than ₹10 lakh crore, strengthening its ability to fund power, transmission and renewable energy projects. The amalgamation builds on an existing relationship between the two companies, with PFC having acquired a 52.63% stake in REC from the Government of India for ₹14,500 crore in March 2019, making REC its subsidiary. Since then, REC has operated under the control of PFC. The merger aims to create a stronger entity better positioned to serve the power sector's financing needs, with the approval representing a significant restructuring move within India's public sector banking landscape. The latest approval is expected to pave the way for full operational integration, subject to remaining procedural and regulatory steps.
REC Limited, established in 1998, serves as a leading public sector financial institution under the Ministry of Power, Government of India. The company plays a pivotal role in India's power sector through financing power projects including generation, transmission, and distribution, actively supporting renewable energy development in solar and wind power. REC is also entrusted with restructuring the debt of State Power Utilities (UPPCLs) to ensure financial stability in the power sector. The company raises funds through various channels like bonds, term loans, and external borrowings to support its lending activities, contributing significantly to India's growing power sector needs and transmission network development.
