Power Finance Corporation board moves REC merger proposal for Presidential approval

State-run non-bank lender Power Finance Corporation Ltd on Saturday (May 16) said its board has reserved the proposal for the merger of state-owned Rural Electrification Corporation Ltd (REC) into the company for approval by the President of India.

The board has also authorised the Chairman and Managing Director of Power Finance Corporation to make an application and seek approval from the President for the proposed merger.

The merger will be based on a share exchange ratio to be determined by valuers and will be subject to regulatory approvals and maintaining the merged entity’s status as a government company.

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Upon completion of the merger, all assets and liabilities of REC Ltd will be transferred to Power Finance Corporation, and REC will stand dissolved under the provisions of the Companies Act.

Union Finance Minister Nirmala Sitharaman had, in the FY27 Budget, announced the restructuring of Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) to help achieve scale and improve efficiency in the public sector NBFC space.

"The government would like to retain a majority stake in the merged entity as it would be the largest government-owned NBFC with strategic presence. Discussions are going on over the options to ensure that the government stake in the merged entity does not fall below 51%," the official said.

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Shares of Power Finance Corporation ended at ₹444.00, down 1.63% or ₹7.35 on the BSE, while shares of REC Ltd ended at ₹345.70, down 0.72% or ₹2.50 on the BSE.