REC Limited, PFC merger gets RBI no objection; shareholder votes next
Representative image: jplenio / Pixabay
RBI issued a conditional no objection certificate for REC's merger into PFC, REC said in a filing dated October 15, 2026; other approvals are still due.
What Happened
The REC Limited and PFC merger has cleared an important regulatory step. The Reserve Bank of India (RBI) has issued a no objection certificate (NOC) for the proposed merger of REC Limited into Power Finance Corporation (PFC), REC told the stock exchanges in a filing dated Thursday, October 15, 2026. The RBI's NOC comes with conditions set out in the certificate, which the filing did not reproduce. The merger is not yet complete: approvals from the shareholders and creditors of both companies, and from other authorities, are still needed.
Key Facts
- The RBI has issued an NOC, with conditions, for the REC-PFC merger, according to REC's exchange filing of October 15, 2026.
- Under the scheme, REC merges into PFC, with PFC as the surviving company.
- REC shareholders are to receive 88 PFC shares of face value Rs 10 for every 100 fully paid-up REC shares held on a record date, with no cash component.
- The boards of both companies approved the scheme on June 28, 2026.
- The scheme is being carried out under Sections 230 to 232 of the Companies Act, 2013.
- The combined lender's loan book is expected to exceed Rs 11 lakh crore.
- Still pending: shareholder and creditor approval at both companies, the stock exchanges, the Securities and Exchange Board of India (SEBI) and the National Company Law Tribunal (NCLT).
Why It Matters
REC and PFC are the two big state-owned lenders that fund India's power sector. Between them they finance power generation, transmission lines, distribution companies run by states, and, increasingly, renewable energy projects. Bringing them under one balance sheet would create one of the largest lenders in the country, with a loan book above Rs 11 lakh crore, according to figures shared when the scheme was announced.
Both companies are registered with the RBI as non-banking financial companies, which is why the central bank's clearance is a required step. An NOC from the RBI signals that the regulator does not object to the change in structure, subject to its conditions. It does not make the merger effective. That will happen only once the remaining approvals are in place and the NCLT sanctions the scheme.
For the wider economy, the merger is part of a long-running effort to simplify the government's financial companies. A single power financier could, in principle, lend in larger amounts to big projects, cut overlapping costs, and raise money more cheaply in bond markets because of its size. At the same time, one lender would carry all of the power sector's risk, including the old problem of state distribution companies that pay late. How the combined company manages that concentration will matter to bond investors, who are among its biggest sources of funds.
| Item | Detail |
|---|---|
| RBI step | NOC issued, with conditions (filing dated Oct 15, 2026) |
| Board approval | June 28, 2026 |
| Swap ratio | 88 PFC shares for every 100 REC shares |
| Combined loan book | Above Rs 11 lakh crore |
| Still needed | Shareholders, creditors, exchanges, SEBI, NCLT |
Impact
Short-term: The NOC removes one regulatory uncertainty and moves the timetable forward. Shareholders of both companies now wait for the meetings at which they will vote on the scheme, and for the record date that decides who receives PFC shares.
Long-term: If approved, India's power-sector lending would sit largely with one state-owned company, which would then fund a big share of the country's grid expansion and clean energy build-out.
Who is affected: Shareholders of REC and PFC, bondholders and other lenders to the two companies, state power utilities and private developers that borrow from them, and the Union government as the owner of the group.
Key Takeaway
The RBI's conditional no objection takes the REC-PFC merger a step closer, but it will not take effect until shareholders, creditors, SEBI, the exchanges and the NCLT also approve it.
Questions and Answers
Has the RBI approved the REC PFC merger?
The RBI has issued a no objection certificate, with conditions, according to REC's stock exchange filing dated October 15, 2026. That is one required step, not final approval of the merger.
How many PFC shares will REC shareholders get?
Under the scheme, REC shareholders are to get 88 PFC shares of Rs 10 face value for every 100 fully paid-up REC shares they hold on the record date, with no cash payment.
What approvals are still needed before the merger happens?
Approval from the shareholders and creditors of both REC and PFC, the stock exchanges, SEBI and the National Company Law Tribunal, along with other statutory requirements.
Has the record date for the share swap been announced?
No record date had been announced in the reports available on October 16, 2026.
Disclaimer: Prepared by the Peepals newsroom from publicly available sources with AI assistance. Information is accurate to the best of our knowledge at the time of publication and may change. Images may be representative. Not professional advice. Report an error via our contact page.
Sourced and fact-checked by the Peepals Global Editorial Team
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