The proposed PFC-REC merger has cleared a key regulatory hurdle after the Reserve Bank of India gave its No Objection Certificate for REC to merge into Power Finance Corporation, according to a filing by REC on the BSE on October 15, 2026. The transaction is expected to create a power-sector financing entity with an aggregate loan book of more than ₹11 lakh crore.
REC said the RBI approval is subject to the instructions and conditions specified by the central bank. The merger scheme must also receive other statutory and regulatory approvals and meet the conditions required for it to become effective.
The respective boards of REC and PFC approved the merger proposal on June 28, 2026. The transaction involves REC, the transferor company, merging into PFC, the transferee company. The scheme remains subject to approval from the shareholders and creditors of the companies, wherever required under applicable laws and the terms of the scheme.
The proposed share exchange ratio is 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 shares would be issued to REC shareholders who are on the record date, which will be determined by the boards of PFC and REC at a future date.
The share exchange ratio had been disclosed by REC on July 29 following the board approvals. The proposed merger brings together two state-run non-banking financial companies that lend to the power sector. The combined loan book size cited by REC indicates the scale of the financing platform that would emerge if the scheme receives all required approvals.
REC and PFC have appointed separate advisers for the transaction. Deloitte Touche Tohmatsu India is serving as the transaction and tax adviser, while Cyril Amarchand Mangaldas is the legal adviser to both companies. 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 was appointed by PFC and Nuvama Wealth Management by REC to provide their respective fairness opinions on the joint valuation reports. These appointments form part of the process supporting the proposed share exchange and merger scheme.
The RBI’s No Objection Certificate does not complete the merger process. REC’s filing said the scheme remains subject to the other approvals, conditions and statutory requirements applicable to the transaction. The next formal milestones will therefore include the required shareholder and creditor approvals, followed by the remaining regulatory and legal steps under the scheme.
