REC Limited receives RBI approval for proposed merger with Power Finance Corporation

REC Limited has secured a no-objection certificate from the Reserve Bank of India (RBI) for its proposed merger into Power Finance Corporation Limited (PFC), marking a key regulatory milestone in strengthening India's energy sector financial framework.

REC received the central bank's clearance on October 15, 2026, subject to conditions and instructions set by the regulator, according to statutory filings made under Securities and Exchange Board of India disclosure rules.

Scheme details and regulatory framework

The decision moves forward a structural integration approved by the boards of directors of both government-backed entities on June 28, 2026. Under the proposed scheme, REC will merge with and into PFC under Sections 230–232 of the Companies Act, 2013.

The strategic alignment of the two major non-banking financial institutions aims to create a unified state lender with deep capital reserves, supporting nationwide power distribution, transmission, and clean energy projects.

Next steps for the merger

While the RBI's no-objection certificate allows the proposal to progress, the transaction remains subject to several additional statutory and corporate approvals. Both companies must secure formal clearances from their respective shareholders and creditors, alongside statutory approvals from judicial and market authorities before the scheme takes final effect.

PFC acts as the primary funding body for key central initiatives, including the Revamped Distribution Sector Scheme and Ultra Mega Power Projects, while expanding coverage across highways, urban rail networks, and clean mobility fleets. The integrated balance sheet is expected to streamline funding for large-scale national infrastructure projects across the country.