Economy & Banking★ Must Know

PFC and REC Boards Approve Merger at 88:100 Share-Swap, Creating ~Rs 11 Lakh Crore Power Financier

By TestNeeti Editorial TeamPublished Sunday, 28 June 2026 2 min readSource: The Hindu BusinessLineArticle 4 of 6

On 28 June 2026, the boards of Power Finance Corporation (PFC) and REC Limited approved a scheme to merge REC into PFC, with a share-exchange ratio of 88 PFC shares for every 100 REC shares held. The merged entity will become India's largest power-sector financier, with a combined loan book of over Rs 11 lakh crore. Both are central Public Sector Undertakings (PSUs) under the Ministry of Power and classified as NBFC-Infrastructure Finance Companies (REC currently operates as a PFC subsidiary). The proposal had received presidential (in-principle government) approval on 10 June 2026, following an in-principle nod from the PFC board in February 2026. The record date for the swap is to be announced later, and the merger remains subject to regulatory and statutory approvals.

Key Facts & Details

9 points

1
The boards of PFC and REC approved merging REC into PFC on 28 June 2026.
2
The share-exchange ratio is 88 PFC shares for every 100 REC shares held.
3
The merged company will be India's largest power-sector financier, with a loan book over Rs 11 lakh crore.
4
Both PFC and REC are PSUs under the Ministry of Power; REC is presently a PFC subsidiary.
5
The merger received government/presidential approval on 10 June 2026, after an in-principle PFC board nod in February 2026.
6
The record date for the share swap will be fixed later; the scheme needs further regulatory approvals.

Deep Dive

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Both companies are classified as NBFC-Infrastructure Finance Companies (NBFC-IFCs) that lend to the power and infrastructure sectors.
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Consolidation aims to strengthen the balance sheet, cut overlapping costs and improve borrowing efficiency for power-sector lending.
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The combined entity will be a dominant financier of India's energy-transition and renewable-power projects.

Exam Focus

What is the share-swap ratio in the PFC-REC merger approved in June 2026, and which ministry administers the two PSUs?

Exam Relevance & Angle

PSU restructuring and large NBFC consolidations are high-yield Banking & Financial Awareness topics. The PFC-REC merger tests the candidate's knowledge of the two power-sector lenders, the Ministry of Power, the NBFC-IFC category and the headline figures (88:100 ratio, ~Rs 11 lakh crore book) that examiners frequently convert into MCQs.

Target Exams

SBI POIBPS POIBPS RRB OfficerRBI Grade BNABARD Grade ASSC CGLRRB NTPCUPSC CSEState PCS

Background & Context

Power Finance Corporation (PFC), established in 1986, and REC Limited (formerly Rural Electrification Corporation, established 1969) are 'Maharatna' central public-sector undertakings under the Ministry of Power and are the country's two largest dedicated lenders to the power sector, both classified by the RBI as NBFC-Infrastructure Finance Companies. In 2019 PFC acquired the government's stake in REC, making REC a subsidiary of PFC, though the two continued to operate as separate listed entities. A share-swap (exchange-ratio) merger consolidates two firms by issuing shares of the acquirer to the target's shareholders in a fixed proportion, determined by a joint valuation; the record date decides which shareholders are eligible for the swap.