PFC and REC boards approve merger, creating ₹11 lakh crore lender
Next story · 30 JunNational study on low participation in Gram Sabhas released
The boards of Power Finance Corporation and REC Limited approved a scheme to merge REC into PFC under Sections 230 to 232 of the Companies Act, 2013. The merged lender will have a loan book of over ₹11 lakh crore. REC shareholders will get 88 PFC shares for every 100 REC shares, and the entity must stay a Government Company.
- Date
- 30 Jun 2026, Ministry of Power
- Transferor / transferee
- REC Limited into Power Finance Corporation (PFC)
- Law
- Sections 230 to 232, Companies Act, 2013
- Loan book
- over ₹11 lakh crore combined
- Swap ratio
- 88 PFC shares of ₹10 for every 100 REC shares of ₹10
- Condition
- merged entity must remain a Government Company with majority Government control
The PFC-REC merger: what happened?
PFC and REC both lend to the power sector. Two Government lenders doing similar work can become one bigger, stronger one. This is the first formal step: the boards have said yes.
- The boards approved the Scheme of Merger of REC into PFC.
- It needs approval of shareholders, creditors and regulatory and government authorities.
- The Government of India must keep majority voting rights and control, directly or indirectly.
What is a share exchange ratio?
- It tells REC shareholders how many PFC shares they get for their REC shares.
- Here it is 88 PFC shares for every 100 REC shares, on a record date to be fixed by the boards.
Why does the PFC-REC merger matter?
- Power finance: One large lender with a loan book of over ₹11 lakh crore.
- Public sector: Merger keeps Government Company status and control.
What can Prelims ask on the PFC-REC merger?
- REC to merge into PFC; boards approved on 30 June 2026.
- Companies Act, 2013, Sections 230 to 232.
- Swap: 88 PFC shares for every 100 REC shares; combined loan book over ₹11 lakh crore.
How to use this in Mains
- As per PIB (2026-06-30): boards of PFC and REC approved a scheme to merge REC into PFC under Sections 230–232 of the Companies Act, 2013.
- Merging the public power financiers is consolidation; watch what it does to lending to discoms.
Quotable data pointThe merged entity will have a loan book of over ₹11 lakh crore, subject to shareholder, creditor and regulatory approvals and to remaining a Government Company.
PIB: Power: PFC–REC merger, 30 Jun 2026
Exam angle
Prelims: PFC, REC, Companies Act merger provisions.
Practice MCQs
Original practice questions (not PYQs).
The PFC-REC merger scheme approved in June 2026 is under which sections of the Companies Act, 2013?
Answer (b) & explanation
PIB (Power), 30 Jun 2026.
Questions students ask about this
Which company merges into which?
REC Limited (transferor) merges into Power Finance Corporation (transferee).
What will REC shareholders get?
88 equity shares of PFC for every 100 equity shares of REC, both of ₹10 face value.
What approvals are still needed?
Approvals of shareholders and creditors of both companies and of relevant regulatory and government authorities.
Keep studying
Go deeper
Official source: PIB: Power: PFC–REC merger, 30 Jun 2026
facts from cited sources only; faculty review pending