RBI NoC for REC-PFC Merger: Power Lenders Move Closer to Union
Why in the news
The Reserve Bank of India issued a no-objection certificate on 15 October 2026 for the proposed amalgamation of REC Ltd with Power Finance Corporation (PFC). REC disclosed the clearance to the stock exchanges the same day.
Key facts
- RBI NoC: granted on 15 October 2026, subject to conditions and instructions laid down by the central bank.
- Structure: REC is the transferor company and will merge into PFC, the transferee company.
- Board approval: both boards approved the scheme on 28 June 2026.
- Legal route: Sections 230-232 of the Companies Act, 2013 (compromises, arrangements and amalgamations).
- Share swap: REC shareholders are to get 88 PFC shares (face value ₹10) for every 100 REC shares held.
- Size: the merged lender is expected to have a loan book of more than ₹11 lakh crore.
- Still pending: approvals of shareholders and creditors of both companies and other statutory clearances; the merged entity must stay a government company with majority control held by the Government of India.
| Item | REC Ltd | PFC |
|---|---|---|
| Role in merger | Transferor | Transferee |
| Established | 1969 | 1986 |
| Type | NBFC, power-sector lender | NBFC, power-sector lender |
About REC and PFC
REC, earlier called Rural Electrification Corporation Limited, was set up in 1969 to fund rural electrification and power projects. It is a Maharatna public sector enterprise under the Ministry of Power. PFC, set up in 1986, is a central public sector enterprise under the same ministry that lends mainly to power generation, transmission and distribution projects. Both are non-banking financial companies regulated by the RBI under the RBI Act, 1934.
Exam angle
- Mergers of companies are governed by Sections 230-232 of the Companies Act, 2013; the NCLT is the adjudicating body.
- An RBI NoC is a regulatory clearance only; it does not by itself make a merger effective.
- Remember transferor (REC) vs transferee (PFC) and the 88:100 swap ratio.