Govt considering merger of state-run entities PFC and REC

The government is considering a merger of state-run power sector lender Power Finance Corporation PFC and its subsidiary REC Ltd as a part of the restructuring push, sources said on Monday. In March 2019, PFC completed the acquisition of a majority stake in REC Ltd by transferring Rs 14,500 crore to the government and was hopeful of the merger of the two firms in 2019-20.

The government is considering a merger of state-run power sector lender Power Finance Corporation (PFC) and its subsidiary REC Ltd as a part of the restructuring push, sources said on Monday. PFC and REC play a key role in funding power generation, transmission and distribution projects. In the Union Budget 2026-27 speech, Finance Minister Nirmala Sitharaman proposed restructuring REC Ltd (formerly Rural Electrification Corporation) and PFC as part of the government's strengthening of public sector financial institutions. Following the announcement, shares of the two entities surged up to 6 per cent on Sunday's special trading session. On Monday, sources indicated that a merger between PFC and REC may happen as part of the restructuring, but the final call would be taken at the highest level. Modalities for this have to be worked out by the Power Ministry, which is an administrative ministry for both entities, they added. In March 2019, PFC completed the acquisition of a majority stake in REC Ltd by transferring Rs 14,500 crore to the government and was hopeful of the merger of the two firms in 2019-20. However, the merger fell through.. PFC acquired 103.94 crore shares constituting 52.63 per cent stake held by the government in REC along with the management control. The acquisition price was worked out to Rs 139.50 per share. This stake acquisition came following the in-principle approval from the Cabinet Committee on Economic Affairs. Both PFC and REC are Navratna central public sector enterprises, and this acquisition was a step towards the consolidation of companies operating in the same space. PFC shares closed higher by 1.13 per cent at Rs 385.60, while REC Ltd gained 1.23per cent to settle at Rs 363.10 on BSE on Monday.

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