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Informist, Saturday, Mar. 21, 2026

 

By Sagar Sen

 

NEW DELHI – The government has started work on the proposed merger of Power Finance Corp. Ltd. and REC Ltd., and the process may take around one year to complete, a senior power ministry official said. "It was proposed in the Budget and the work has been initiated. Generally these things take 10-12 months at least," the official told Informist.

 

The official said various aspects related to the proposed restructuring will be looked at, including the ultimate shareholding structure of the resultant entity. The government does not want its shareholding to come below 51% in the merged entity since power is critical to the country's development and both the companies are important for energy security and energy transition journey, the official added. 

 

In the Union Budget for 2026-27 (Apr-Mar) presented by Finance Minister Nirmala Sitharaman on Feb. 1, the government proposed to restructure Power Finance Corp. Ltd. and REC Ltd. to achieve scale and efficiency in public sector non-banking financial companies. As on Dec. 31, PFC's consolidated loan asset book was INR 11.51 trillion while REC's loan asset book was at INR 5.82 trillion.

 

PFC and REC come under the administrative authority of the Ministry of Power. PFC is a key institution that finances projects related to the power sector and holds 20% market share. The Maharatna company is designated as a nodal agency for revamped distribution sector scheme and ultra mega power projects, and bid process coordinator for independent transmission projects, according to the company's website.

 

REC, another Maharatna company under the administrative control of the Ministry of Power, finances power sector projects involved in generation, transmission, distribution, renewable energy, and new technologies. The company is the nodal agency for the revamped distribution sector scheme, as per the company's website. Recently, it has also diversified into the non-power infrastructure sector comprising roads and highways, metro rail, airports, ports, information technology communication. In 2019, PFC had acquired a 52.6% stake in REC and the convergence was to facilitate better financial aid to the power sector in India.

 

Following the Budget announcement, boards of both the companies gave an in-principle approval to proceed with restructuring in the form of a merger. PFC in FY19 acquired 52.63% stake in REC from the government for INR 145 billion as part of the government's divestment initiative.

 

Shares of PFC Friday ended 1% higher at INR 412.85 on the National Stock Exchange and those of REC ended 0.3% higher at INR 330.50. For the December quarter, PFC had reported net profit of INR 47.63 billion on revenue of INR 146.56 billion. REC reported net profit of INR 40.43 billion for the December quarter and the total income came in at INR 149.11 billion.  End

 

Edited by Akul Nishant Akhoury

 

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