The Boards of Directors of REC Limited and Power Finance Corporation Limited (PFC) have accorded in-principle approval to proceed with a proposed merger of the two public sector non-banking financial companies (NBFCs), in line with the announcement made in the Union Budget 2026–27 to enhance scale and efficiency in the sector.

 

In her Budget speech, the Finance Minister highlighted the vision for NBFCs under Viksit Bharat, with clear targets for credit disbursement and technology adoption, and stated that, as a first step toward achieving scale and improving efficiency in public sector NBFCs, restructuring of Power Finance Corporation and Rural Electrification Corporation has been proposed.

 

On 6 February 2026, the Boards of PFC and REC noted that 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.

 

In their filings, both REC and PFC (in revised filing) have ensured that the merged entity will continue to remain classified as a “Government Company” under the provisions of the Companies Act, 2013.

 

Further 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% in REC, following the acquisition of the Government of India’s shareholding in REC in 2019.