RBI Grants No Objection Certificate for REC Merger into Power Finance Corporation — October 17, 2026

In a major step toward consolidating India's state-backed power infrastructure financiers, the Reserve Bank of India (RBI) has issued a No Objection Certificate (NoC) for the proposed merger of REC Limited into Power Finance Corporation Limited (PFC).

The regulatory clearance was communicated to the stock exchanges by REC and PFC following receipt of the central bank's communication dated October 15, 2026. The NoC was granted subject to specific instructions and conditions laid down by the banking regulator.

Structure and Share Swap Ratio

Under the proposed scheme of amalgamation, REC will act as the transferor company, while PFC will serve as the transferee entity. The respective boards of both state-run non-banking financial companies (NBFCs) approved the scheme on June 28, 2026.

The key parameters of the transaction include:

• Share Swap Ratio: Shareholders of REC will receive 88 fully paid-up equity shares of PFC (face value of ₹10 each) for every 100 fully paid-up equity shares held in REC (face value of ₹10 each).
• Record Date: The record date for determining the eligibility of REC shareholders will be decided and announced by the boards at a later stage.
• Legal Framework: The transaction is being executed under Sections 230–232 and other applicable provisions of the Companies Act, 2013.

Deloitte Touche Tohmatsu India is serving as the transaction and tax advisor, while Cyril Amarchand Mangaldas is acting as the legal advisor to both entities. Valuation assessments were jointly performed by RBSA Valuation Advisors and Ernst & Young Merchant Banking Services, with fairness opinions provided by SBI Capital Markets and Nuvama Wealth Management.

Scale and Strategic Significance

The amalgamation is designed to eliminate inter-corporate overlap and enhance capital efficiency across India's power finance architecture. PFC acquired a 52.63% controlling stake in REC from the Government of India in March 2019, turning REC into a subsidiary.

The full consolidation will create a mega-financier with an aggregate loan book exceeding ₹11 lakh crore. The unified balance sheet is positioned to play a vital financing role in India's massive capital expenditure plans for renewable energy, transmission infrastructure, and distribution sector reforms under the government's long-term energy transition targets.

Remaining Approvals and Next Steps

While the RBI’s conditional clearance removes the principal regulatory bottleneck in the financial sector, the transaction is not yet final.

Key Pending Clearances:

• Approval and observation letters from stock exchanges (BSE and NSE) and the Securities and Exchange Board of India (SEBI).
• Approval from the respective equity shareholders and creditors of both PFC and REC.
• Formal sanction and approval of the scheme from the National Company Law Tribunal (NCLT).

Until all necessary statutory, judicial, and stakeholder approvals are obtained and the scheme is filed with the Registrar of Companies, both entities will continue their regular day-to-day operations and debt disbursements independently.

Tags: Power Finance Corporation REC Limited RBI NBFCs Ministry of Power Indian Stock Markets