In a regulatory filing, PFC said its board took note of the government’s proposal to restructure the two state-run non-banking financial companies to achieve scale, improve efficiency and support higher credit disbursement in the power sector.
FM Sitharaman, in her Budget speech on February 1, proposed to restructure PFC and REC in order to achieve scale and improve efficiency in the public sector NBFCs.
The Cabinet Committee on Economic Affairs has earlier cleared a proposal under which PFC acquired 52.63% of the government’s holding in REC. With this acquisition, PFC and REC are currently operating in a holding subsidiary structure.
The proposed merger would consolidate the two entities into a single balance sheet, subject to statutory approvals and detailed structuring.
PFC and REC are two of India’s key public sector non-banking financial companies, playing a central role in financing the country’s power and infrastructure sectors.
PFC under the administrative control of the Ministry of Power. Its core mandate is to provide financial support to the Indian power sector across the entire value chain, including generation, transmission, distribution and renewable energy. Over the years, PFC has evolved from a lender focused mainly on state electricity boards into a diversified infrastructure financier, with exposure to large central utilities, private developers and green energy projects. The company also plays a policy-aligned role by supporting government schemes such as distribution reforms, grid expansion and clean energy transition.
REC, meanwhile, was originally set up to finance rural electrification projects. Its initial focus was on expanding electricity access to rural and remote areas, a mission that was critical in achieving near-universal electrification in India.
Over time, REC expanded its scope beyond rural electrification to become a full-spectrum power sector lender, financing generation, transmission and distribution projects across states and utilities. Like PFC, REC is also a listed public sector NBFC and operates under the Ministry of Power.
On Friday, PFC shares closed 0.6% higher at Rs 417.6 on NSE, while shares declined just over 2% to settle at Rs 372.6 apiece.