REC, PFC clarify merger filing; merged entity to retain Govt company status

New Delhi: REC Limited and Power Finance Corporation Limited (PFC) have issued a clarification stating that, post-merger, the merged entity —and not PFC alone—will continue to remain classified as a “Government Company” under the provisions of the Companies Act, 2013.

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The clarification follows reports in sections of the media which stated that “post-merger, PFC continues to remain as a Government company.” PFC has since corrected this in its revised stock exchange filing, explicitly clarifying that the government company status will apply to the merged entity.

Earlier, the Boards of Directors of REC and PFC had accorded in-principle approval to proceed with a proposed merger of the two public sector non-banking financial companies (NBFCs), in line with the announcement made in the Union Budget 2026–27 to enhance scale and efficiency in the public sector NBFC space.

In her Budget speech, the Union Finance Minister had outlined the vision for NBFCs under Viksit Bharat, with a focus on higher credit disbursement and greater technology adoption. As part of this roadmap, restructuring of PFC and REC was proposed as a first step towards achieving scale and improving efficiency.

On February 6, 2026, the Boards noted that the proposed restructuring would involve the formulation of a detailed merger scheme in accordance with applicable laws and regulatory requirements. The scheme, once finalised, will be placed before the concerned statutory and regulatory authorities for approvals.

PFC currently holds a majority stake of 52.63 percent in REC, following the acquisition of the Government of India’s shareholding in REC in 2019. The companies have stated that further details on the merger structure, integration roadmap and implementation timelines will be shared after completion of the approval process.

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