PFC and REC Merger: A Boost for Renewable Energy Financing in India

The merger of Power Finance Corporation (PFC) and REC Ltd is set to enhance financing accessibility for India's renewable energy sector. It will bolster underwriting capacity and refinancing options for large renewable projects, overcoming past funding challenges due to single borrower exposure limits imposed by the RBI.

The proposed merger between Power Finance Corporation (PFC) and REC Ltd is projected to revamp access to financing for India's renewable energy developers, particularly by enabling the funding of large-scale and intricate projects, as per CreditSights.

These state-run lenders, both acting as public sector non-banking financial companies focusing on power sector financing, exhibit loan books divided among renewables, transmission, and conventional power generation.

The merger is anticipated to reinforce the capital base significantly, alleviate funding limitations, and enhance financing availability for expansive transmission grid improvements, although it might slightly impact competition and funding costs in the power-focused NBFC sector.