Post-acquisition, PFC serves as the holding company, and REC, a ‘Maharatna’ NBFC under the Ministry of Power, operates as its subsidiary. The move aims to scale operations, enhance efficiency, and implement technology adoption in public sector NBFCs.
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State-owned Power Finance Corporation and REC have set the process in motion for a merger and in separate meetings, their boards accorded in-principle approval for the process, to create a large power financing company in the country.
Following an ‘in principle’ approval by the Cabinet Committee on Economic Affairs (CCEA) in 2018, PFC had acquired 52.63 per cent of government’s holding in REC, making it a subsidiary.
Budget 2026 vision
In the General Budget announced on Sunday the Union Finance Minister had indicated restructuring PFC and REC, while outlining the government’s approach to sector consolidation.
“The vision for NBFCs for Viksit Bharat has been outlined with clear targets for credit disbursement and technology adoption. In order to achieve scale and improve efficiency in the Public Sector NBFCs, as a first step, it is proposed to restructure the Power Finance Corporation and Rural Electrification Corporation,” Union Finance Minister Nirmala Sitharaman had said during her Budget speech.
In the filing, PFC also said its board noted the Union Budget 2026–27 announcement on restructuring public sector non-banking financial companies (NBFCs).
Merger scheme
PFC said the detailed merger scheme, once finalised, would be shared after requisite approvals.
Between them the two companies have a combined loan book of over ₹17 lakh crore, with PFC’s loan book double that of REC.
The bulk of PFC’s exposure was to the power generation segment, followed by transmission and distribution segments.
Published on February 6, 2026
