REC Limited and Power Finance Corporation Limited (PFC) have taken a major step towards strengthening India’s power finance sector by approving a Scheme of Merger. The decision was approved by the Boards of Directors of both companies on June 28, 2026. Under the proposed plan, REC will merge with PFC, making REC the transferor company and PFC the transferee company. After the merger, the combined organisation will have a total loan book of more than ₹11 lakh crore, making it one of the largest public sector financial institutions in the country.

The merger has been proposed under Sections 230 to 232 and other relevant provisions of the Companies Act, 2013. Both companies have received initial approvals from their respective boards, shareholders, and creditors. However, the merger will only become effective after obtaining all necessary approvals from regulatory authorities and other government agencies. The proposal also requires the approval of shareholders and creditors as per legal requirements.

One of the important conditions of the merger is that the merged company must continue to remain a Government Company under the Companies Act, 2013. The Government of India must continue to hold majority voting rights and retain control of the combined entity, either directly or indirectly.

The companies have also announced the share exchange ratio for the merger. According to the approved scheme, shareholders of REC will receive 88 fully paid-up equity shares of PFC with a face value of ₹10 each for every 100 fully paid-up equity shares of REC with the same face value. The exchange will be carried out based on a record date, which will be announced later by the boards of both companies.

To ensure transparency and smooth implementation of the merger, several leading financial and legal firms have been appointed. Deloitte Touche Tohmatsu India LLP has been appointed as the Transaction and Tax Advisor, while Cyril Amarchand Mangaldas is serving as the legal advisor for both companies.

Independent valuation experts were also appointed by both companies. PFC selected RBSA Valuation Advisors LLP, while REC appointed Ernst & Young Merchant Banking Services LLP to jointly prepare the valuation reports. In addition, SBI Capital Markets issued a fairness opinion for PFC, while Nuvama Wealth Management provided a fairness opinion for REC.

The approval of the merger was officially informed to the National Stock Exchange (NSE) and BSE Limited by REC’s Company Secretary and Compliance Officer, Dinesh Garg, under the SEBI Listing Regulations. The merger is expected to strengthen India’s public sector power financing system and improve the financial capabilities of the combined organisation.

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