The central government has finalised the broad blueprint for the proposed merger between Maharatna central public sector enterprises PFC and REC, as announced in Budget 2026. According to sources confirmed on August 26, 2026, the Centre is looking to retain 51 per cent voting rights to preserve majority control in the merged entity, even if its ordinary shareholding declines. The merger is expected to reduce the government's stake in the combined PFC-REC entity to approximately 37 per cent through the ordinary shares route, down from the current 51 per cent in both companies.
Officials are examining superior voting rights (SVR) shares alongside preference shares to ensure government control remains intact. As per the proposed arrangement, around seven crore SVR shares may be issued at a premium, along with around 63 crore redeemable preference shares (RPS) with a face value of ₹10 each. The government is considering issuing SVRs with one share carrying 10 voting rights, compared to the normal one-vote-per-share principle. These redeemable preference shares can be redeemed by the company under agreed terms, helping raise capital without diluting ordinary equity ownership.
REC Limited delivered exceptional financial results during FY2025-26, achieving its highest-ever annual disbursements of ₹2.11 lakh crore while sanctions rose to a record ₹4.09 lakh crore. The company's net worth crossed ₹84,000 crore, registering around 9% year-on-year growth, while gross loan assets stood at ₹5.84 lakh crore as on March 31, 2026. REC recorded a net profit of ₹16,282 crore and total income of ₹59,187 crore during the year. The company's renewable energy loan assets crossed ₹75,000 crore, registering around 30% year-on-year growth, with sanctioned renewable energy projects involving loan assistance of more than ₹85,000 crore.
Under the proposed arrangement, REC shareholders will receive 88 PFC shares for every 100 REC shares held on the record date, which is yet to be announced. The merger scheme, including the share swap ratio, was cleared by the boards in June. There is no cash payout involved under the basic share-swap structure. REC will be absorbed into PFC, subject to necessary approvals, resulting in a public sector financing entity with an aggregate loan book exceeding ₹11 lakh crore, making it one of India's largest power-sector financing institutions.
The main purpose of combining the two entities is to build a larger, more efficient state-owned financial institution capable of catering to the country's expanding power and infrastructure financing needs. Analysts expect the consolidated balance sheet to give the combined entity enhanced lending capacity to fund large-scale projects across electricity generation, transmission, renewable energy, storage and related infrastructure. The merger blueprint includes the post-merger ownership and voting structure, with the proposal currently moving through the draft Cabinet note process. The merger still requires approvals from shareholders, creditors, regulators and the government before it becomes effective. PFC and REC shares were trading mildly lower in afternoon trade on Wednesday following the announcement.
