New Delhi: The proposed merger of REC Limited into Power Finance Corporation (PFC) has received the approval of the President of India, the two state-run power sector lenders informed the stock exchanges in separate regulatory filings on Wednesday.
"It is hereby informed that the Ministry of Power, vide its letter dated June 10, 2026, has conveyed the approval of the Hon'ble President of India in respect of the aforesaid proposal," PFC said in its filing.
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REC, in its intimation, said the Ministry of Power "has conveyed the approval of the Competent Authority in respect of the aforesaid proposal."
The approval comes in continuation of the two companies' intimations dated May 16, when their boards had decided to reserve the proposal for the merger of REC into PFC for the approval of the President of India.
The merger will be executed under Sections 230–232 of the Companies Act, 2013, with a share exchange ratio to be determined by independent valuers. Upon completion of approvals and legal formalities, all assets and liabilities of REC will be transferred to PFC, and REC will stand dissolved, with PFC as the surviving entity.
A key condition of the merger is that the combined entity will continue to retain its status as a 'Government Company' both during and after the process. Completion of the merger remains subject to final board approvals and receipt of statutory and regulatory clearances.
The merger of the two Maharatna power sector financiers was set in motion by the Union Budget 2026. PFC's board accorded in-principle approval for the merger on February 6, days after Union Finance Minister Nirmala Sitharaman proposed restructuring REC and PFC as part of the government's efforts to strengthen public sector financial institutions. The proposal was approved pursuant to the in-principle approval of the Cabinet Committee on Economic Affairs.
The merger follows PFC's acquisition of the government's entire 52.63 percent stake in REC in 2019. The Centre currently holds a 56 percent stake in PFC.
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Analysts have noted that post-merger, government ownership in the combined entity may fall below the critical 51 percent threshold unless additional capital infusion or restructuring is undertaken, a question that the share exchange ratio and the final scheme structure will need to address.
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