The proposed merger of state-run power-sector lenders REC and Power Finance Corporation (PFC) has cleared a key regulatory hurdle after REC received a No Objection Certificate from the Reserve Bank of India (RBI), bringing the companies closer to creating a financing entity with an aggregate loan book of more than ₹11 lakh crore.
REC said in a filing on the BSE that it received the RBI’s NoC on October 15, 2026, subject to the instructions and conditions specified by the central bank. The approval is one of several statutory and regulatory clearances required before the merger can take effect.
The scheme still requires other approvals and the fulfilment of applicable conditions, including approval from the shareholders and creditors of the companies involved, where required under law and the terms of the scheme. The boards of REC and PFC had approved the proposed merger on June 28, 2026.
Under the proposed arrangement, REC will be merged into PFC. REC had earlier informed the exchanges that shareholders of the transferor company would receive 88 fully paid-up equity shares of PFC, each with a face value of ₹10, for every 100 fully paid-up equity shares of REC. The final record date for determining the eligible shareholders is to be decided by the boards of PFC and REC at a future date.
The proposed combined institution would become a major source of finance for India’s power-sector infrastructure, with lending exposure spanning the companies’ existing loan books. REC and PFC are state-run non-banking financial companies that provide financing to the electricity sector. The disclosed loan-book size indicates the scale of the entity that would emerge if the transaction receives all remaining approvals.
The merger process has involved financial, valuation, tax and legal advisers appointed by the two companies. Deloitte Touche Tohmatsu India is serving as the transaction and tax adviser, while Cyril Amarchand Mangaldas is the legal adviser to both PFC and REC. RBSA Valuation Advisors LLP was appointed by PFC and Ernst & Young Merchant Banking Services LLP by REC to provide joint valuation reports.
SBI Capital Markets and Nuvama Wealth Management have been appointed by PFC and REC respectively to provide fairness opinions on the joint valuation reports. These appointments form part of the transaction process leading to the proposed share-exchange arrangement.
REC said the RBI’s NoC remains subject to the specified instructions and conditions. The next stages will therefore depend on the remaining statutory and shareholder and creditor approvals, as applicable, before the merger can become effective.
