The boards of directors of Power Finance Corporation Ltd (PFC) and REC Ltd have independently accorded in-principle approval to the proposed merger of the two entities.
The merged entity will continue to remain classified as a “Government Company,” under provisions of the Companies Act, 2013, the two entities have clarified.
The approval by the boards of the two companies is in line with the announcement made by Union finance minister in the Union Budget 2026-27, to enhance the scale and efficiency in the sector.
The announcement made by Union finance minister, Ms Nirmala Sitharaman, in her Budget 2026 speech on February 1, 2026, was as follows:
“The vision for NBFCs for Viksit Bharat has been outlined with clear targets for credit disbursement and technology adoption. In order to achieve scale and improve efficiency in the Public Sector NBFCs, as a first step, it is proposed to restructure the Power Finance Corporation and Rural Electrification Corporation.”
The proposed restructuring will involve formulation of a detailed merger scheme in accordance with applicable laws and regulatory requirements. The scheme, once finalized, will be placed before the relevant authorities for necessary approvals.
Details of the merger structure, integration roadmap, and implementation timelines will be shared upon completion of the approval process.
PFC currently holds a majority stake of 52.63 per cent in REC, following the acquisition of the Government of India’s shareholding in REC in 2019.
REC Ltd was originally incorporated with the name Rural Electrification Corporation Ltd. To reflect the gradual extension of the company’s activities beyond rural electrification, the company’s name was officially changed to REC Ltd, effective October 13, 2018.
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