RBI Issues No-Objection Certificate for REC Merger into Power Finance Corporation — October 19, 2026

The Reserve Bank of India (RBI) has issued a No-Objection Certificate (NOC) approving the proposed merger of REC Limited into Power Finance Corporation Limited (PFC), according to regulatory disclosures made by the state-run power financiers to Indian stock exchanges.

The clearance marks a major regulatory milestone in the consolidation of India's two dominant public sector non-banking financial companies (NBFCs) dedicated to power and energy infrastructure lending. Under the proposed scheme of arrangement, REC will serve as the transferor company and PFC will be the transferee company, folding REC's operations directly under its parent.

Creating an ₹11 Lakh Crore Infrastructure Financing Giant

The amalgamation is set to create an energy sector balance sheet of unprecedented scale.

Key Dimensions of the Merger:

• Consolidated Loan Book: The combined lending asset base of the merged entity will surpass ₹11 lakh crore, establishing it as one of the largest specialized infrastructure lenders in Asia.
• Share Exchange Terms: Under the proposed swap ratio approved by the boards of both entities in June 2026, REC shareholders are slated to receive 88 fully paid-up PFC equity shares of ₹10 each for every 100 fully paid-up REC equity shares held.
• Corporate Structure: In March 2019, PFC acquired the Government of India’s 52.63% controlling stake in REC for roughly ₹14,500 crore, operating REC as a subsidiary since then. The current scheme formally integrates the two entities while ensuring the combined entity remains a central public sector enterprise under the Ministry of Power.

Strategic Significance for India's Power Transition

Consolidating PFC and REC aligns with New Delhi's broader agenda to streamline public sector NBFCs and eliminate overlapping operational structures. A unified entity provides a single-window financing mechanism capable of underwriting massive capital expenditures needed for India's power distribution reforms, transmission networks, and its target of achieving 500 GW of non-fossil fuel energy capacity by 2030.

Market analysts note that a unified balance sheet will also enhance bargaining power in domestic and offshore bond markets, lowering borrowing costs and optimizing treasury operations.

Pending Clearances and Timeline

While the central bank’s no-objection clearance clears one of the most critical regulatory hurdles, the companies highlighted that the NOC remains subject to specified instructions and does not immediately bring the scheme into effect.

Next Steps for the Amalgamation:

• Clearances from the BSE, the National Stock Exchange of India (NSE), and the Securities and Exchange Board of India (SEBI).
• Convening meetings and securing approval from respective equity shareholders and institutional lenders/creditors.
• Final sanction and confirmation of the scheme of arrangement by the National Company Law Tribunal (NCLT) or designated statutory authorities.

PFC management has previously targeted April 1, 2027, as the tentative completion horizon for completing the amalgamation and transitioning into a single operating corporate vehicle.

Tags: Power Finance Corporation REC Limited RBI NBFCs PSU Stocks Ministry of Power