PFC, REC Approve Merger Plan; Combined Loan Book To Cross ₹11 Lakh Crore

Shares of Power Finance Corporation (PFC) and REC Ltd. traded lower in early deals on Monday after both state-owned lenders approved a merger scheme that will combine the two power sector financiers into a single entity with a loan book exceeding ₹11 lakh crore. PFC shares declined 1.83% to ₹424.75, while REC slipped 0.32% to ₹363.50 during early trade.

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Merger Scheme Gets Board Approval

In separate exchange filings dated June 28, both companies said their respective boards had approved the Scheme of Merger under Sections 230 to 232 of the Companies Act, 2013. As part of the proposal, REC will be merged into PFC.

Under the approved share swap arrangement, REC shareholders will receive 88 equity shares of PFC for every 100 equity shares of REC held. The record date for determining eligible shareholders will be announced later by the boards of both companies.

The merger is subject to approvals from shareholders, creditors, regulatory authorities and other statutory bodies before it becomes effective.

Government Control To Continue

Both companies said the scheme is conditional upon the merged entity continuing to qualify as a government company under the Companies Act. The Government of India will retain majority voting rights and management control after the transaction is completed.

According to the companies, the merger is expected to improve scale and operational efficiency by bringing together two of India’s largest power sector financing institutions under a single entity.

Advisors Appointed For The Transaction

PFC and REC have appointed Deloitte Touche Tohmatsu India LLP as the transaction and tax advisor, while Cyril Amarchand Mangaldas is acting as the legal advisor for the merger.

The joint valuation reports were prepared by RBSA Valuation Advisors LLP and Ernst & Young Merchant Banking Services LLP. Fairness opinions have been provided by SBI Capital Markets for PFC and Nuvama Wealth Management for REC.

Merger Timeline

The aforementioned consolidation is in accordance with the Union Budget 2026, which has announced that there is an intention to consolidate the two public sector banks to make them efficient and enhance their finance capacity in the power industry.

As per the implementation roadmap shared earlier, the merger process is targeted for completion by April 1, 2027, subject to approvals from the Department of Investment and Public Asset Management (DIPAM), shareholders and other regulatory authorities.

Once completed, the combined entity is expected to become one of the country’s largest specialised infrastructure financiers, with an aggregate loan portfolio of more than ₹11 lakh crore, strengthening its role in financing India’s power and energy infrastructure projects.