The Boards of Directors of REC and Power Finance Corporation have granted in-principle approval to proceed with a proposed merger of the two public sector non-banking financial companies. The decision aligns with the announcement made in the Union Budget 2026–27, aimed at enhancing scale and operational efficiency among public sector NBFCs.

In her Budget speech, the Finance Minister outlined the vision for NBFCs under Viksit Bharat, including targets for credit disbursement and technology adoption, and stated that restructuring of PFC and REC would be a first step towards achieving scale and improving efficiency.

On 6 February 2026, the Boards of both entities noted that the proposed restructuring would involve formulation of a detailed merger scheme in accordance with applicable laws and regulatory requirements. Once finalised, the scheme will be submitted to the relevant authorities for statutory and regulatory approvals.

In their filings, REC and PFC have clarified that the merged entity will continue to be classified as a “Government Company” under the Companies Act, 2013.

Further details on the merger structure, integration roadmap and implementation timelines are expected to be disclosed after completion of the approval process. PFC currently holds a 52.63 per cent stake in REC, following its acquisition of the Government of India’s shareholding in 2019.