Government Evaluates Strategic Merger of PFC and REC

The Centre is looking at a possible merger of state-run power sector lenders Power Finance Corporation (PFC) and REC Ltd as part of its review of public-sector financial institutions, according to PTI reports. The proposal is still under consideration, with procedural requirements yet to be completed.  

Once these steps are done, the matter is expected to be placed before the Cabinet for approval. 

Budget Reference 

The possible consolidation was mentioned in the Union Budget 2026-27 speech by Finance Minister Nirmala Sitharaman, who referred to restructuring both lenders.  

The power ministry, which is the administrative ministry for PFC and REC, is working on the framework and process related to the proposal. 

Overlapping Functions 

REC, earlier known as Rural Electrification Corporation, was initially set up to finance rural electrification projects.  

Over the years, its lending activities have expanded and now largely overlap with those of Power Finance Corporation, which finances power generation, transmission and distribution projects.  

With both entities operating in similar areas, the government is examining whether a single structure would be more practical. 

Existing Ownership Link 

The 2 lenders are already connected through an earlier transaction. In March 2019, REC Ltd came under PFC’s control after PFC acquired a 52.63% stake from the government. The acquisition involved a payment of ₹14,500 crore and the purchase of 1,039.4 million shares at ₹139.50 per share.  

The deal had received in-principle approval from the Cabinet Committee on Economic Affairs. Both PFC and REC are classified as Navratna central public-sector enterprises. 

PFC and REC Share Price Performance  

As of February 3, 2026, 11:56 am, Power Finance Corporation Ltd (PFC) share price was trading at ₹390.90, a 1.36% increase from the previous closing price.  

While REC Limited share price was at ₹371.70, a 2.37% increase from the previous closing price. 

Read More: Budget 2026: FM Proposes Restructuring of REC and PFC to Strengthen Public Sector Financial Institutions! 

Conclusion 

The merger proposal is being reviewed in the context of overlapping roles and an existing ownership structure, with further steps dependent on completion of procedures and Cabinet approval. 

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