The board of Power Finance Corporation (PFC) on Friday approved an in-principle merger with REC, taking the Union Budget proposal for restructuring of two of the major public sector non-bank lenders forward.
PFC already owns 52.63% in REC, following the acquisition of the government holding in March 2029.
“The board of directors of PFC took note of the budget announcement and accorded its in-principle approval for restructuring in the form of a merger of PFC and REC, while ensuring that, the merged entity continues to remain as a “government company,” the company said in a regulatory filing to stock exchanges.
The detailed merger scheme is yet to be finalised. Both PFC and REC are listed.
At present, PFC is operating as a holding company while REC is a subsidiary.
In the union budget, Finance Minister Nirmala Sitharaman shared a vision for readying NBFCs for Viksit Bharat so that these entities are ready for higher 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,” she had said.
REC, earlier known as Rural Electrification Corp, diversified beyond its rural focus to become a full-spectrum power sector lender, financing generation, transmission and distribution projects across states.
Source: Economic Times