PFC REC Merger Timeline Targets April 2027 Completion as Government Pushes PSU Consolidation

India’s power sector financing space is set for a major restructuring, with 2 state-run lenders moving ahead with a planned merger aimed at improving scale and operational efficiency. 

Merger Plan and Timeline Overview 

As per The Moneycontrol reports, the proposed combination of Power Finance Corporation and REC Limited is expected to be completed by April 1, 2027, subject to approvals from multiple authorities including DIPAM and other government bodies. 

The consolidation was first outlined by Nirmala Sitharaman, Finance Minister, in Budget 2026 as part of efforts to enhance efficiency and create a larger, more integrated financing entity in the power sector. 

The roadmap is structured across 3 distinct phases, beginning with the preparation of the merger framework and extending through regulatory approvals and final implementation. 

Phase-Wise Execution and Regulatory Process 

The first phase involves finalising the merger scheme, including valuation, fairness opinion, legal due diligence and board approvals. It also requires presidential consent, along with no-objection certificates from lenders and approvals from stock exchanges, SEBI, and the RBI.  

The final board clearance for this stage is expected by July, with overall approvals targeted between September and October. 

In the second phase, beginning August, the companies will approach the Ministry of Corporate Affairs with the merger application. This stage includes stakeholder consultations, regulatory filings and hearings.  

The National Company Law Tribunal will review the scheme, oversee meetings of shareholders and creditors, and ensure the process remains equitable. A chairperson will be appointed to conduct these meetings and submit a report on voting outcomes and compliance. 

The final phase includes submission of the chairperson’s report by December, followed by a concluding hearing likely in February. After approval, steps such as record date determination, share issuance and listing formalities are expected to be completed by March 2027. 

Structure, Operations and Impact 

Currently, Power Finance Corporation operates under the power ministry and holds a 52.63% stake in REC.  

REC’s business spans the broader power infrastructure ecosystem, including generation, transmission, distribution, renewable energy and emerging areas such as electric vehicles, battery storage and green hydrogen. 

During the transition period, trading in the shares of both companies may be temporarily suspended. The overall timeline and structure remain subject to findings from legal due diligence and approvals from bodies such as the Cabinet Committee on Economic Affairs. 

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Conclusion 

The planned merger of PFC and REC represents a significant step in consolidating state-owned financial institutions in the power sector, with a detailed timeline and multi-layered approval process guiding its execution towards completion in 2027. 

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