**Executive Summary**
The Board of Directors of Power Finance Corporation Limited (PFC) and REC Limited (REC) have approved a merger scheme to integrate REC into PFC, creating a financing entity with a loan book exceeding INR 11 lakh crore. The merger is subject to regulatory, shareholder, and creditor approvals, as well as the maintenance of the entity's "Government Company" status. A share exchange ratio of 88 PFC shares for every 100 REC shares has been established, with the record date to be determined at a future time.
**Key Points / Main Content**
**Merger Structure and Scale**
* REC Limited (Transferor Company) will merge into PFC (Transferee Company) under Sections 230 to 232 of the Companies Act, 2013.
* The merger will create a consolidated financing entity with an aggregate loan book of over INR 11 lakh crore.
**Conditions for Approval**
* The scheme requires approvals and consents from the respective shareholders and creditors of both PFC and REC.
* The merger is contingent upon clearance from all relevant regulatory and governmental authorities.
* The merged entity must continue to qualify as a "Government Company" under the Companies Act, 2013.
* The Government of India must retain majority voting rights and control (directly or indirectly) in the merged entity.
**Share Exchange Terms**
* Shareholders of REC will receive 88 fully paid-up equity shares of PFC (INR 10 each) for every 100 fully paid-up equity shares of REC (INR 10 each).
* The specific record date for this exchange will be determined by the Boards of both companies at a future date.
**Advisory Panel**
* Deloitte Touche Tohmatsu India LLP (Transaction and Tax) and Cyril Amarchand Mangaldas (Legal) are advising both entities.
* Valuation reports were provided by RBSA Valuation Advisors (for PFC) and Ernst & Young Merchant Banking Services (for REC).
* Fairness opinions were provided by SBI Capital Markets (for PFC) and Nuvama Wealth Management (for REC).
**Impact Analysis**
**Shareholders of REC Limited**
**Impact**
Current shareholders will see their holdings converted into PFC equity at a ratio of 88:100.
**Action Required**
Monitor future announcements for the determination of the record date and participate in the voting process for the scheme's approval.
**Shareholders and Creditors of PFC**
**Impact**
The entity will significantly expand its loan book and market position through the absorption of REC.
**Action Required**
Review the scheme details and provide necessary approvals as required under the Companies Act.
**Government of India**
**Impact**
The Government must maintain majority control and voting rights to satisfy the conditions of the merger.
**Action Required**
Provide requisite governmental approvals and ensure the merged entity retains its status as a "Government Company."
Key Entities Referenced
Power Finance Corporation Limited (PFC): The transferee company and primary entity resulting from the merger, creating a financing entity with a loan book exceeding INR 11 lakh crore.
REC Limited (REC): The transferor company being merged into PFC as part of a strategic consolidation under the Ministry of Power.
Companies Act, 2013: The legislative framework, specifically Sections 230 to 232, governing the approval and legal execution of the merger scheme.
Scheme of Merger: The specific proposal approved by the boards of PFC and REC to consolidate their operations, subject to regulatory and shareholder consents.
Ministry of Power
Approval of Merger scheme by Board of
Directors of PFC and REC
प्रव तथ: 30 JUN 2026 9:28AM by PIB Delhi
The Board of Directors of Power Finance Corporation Limited (PFC) and REC Limited (REC) approved
the Scheme of Merger (Scheme) for merger of REC (Transferor Company) into PFC (Transferee
Company) and their respective shareholders and creditors, under Sections 230 to 232 and other applicable
provisions of the Companies Act, 2013. The merger of REC into PFC shall create a financing entity with
an aggregate loan book of over INR 11 lakh crore.
The Scheme is conditional upon and subject to, inter-alia receipt of all requisite approvals and consents
required under applicable law including, approvals from the respective shareholders and creditors of both
the companies, and all relevant regulatory and governmental authorities; and the Merged Entity continuing
to qualify as a ‘Government Company’ under the Companies Act, 2013 and the Government of India
continuing to retain majority voting rights and control in the merged entity (directly or indirectly).
Pursuant to the Scheme and valuation report, the Share Exchange Ratio for the Proposed Merger of REC
into PFC shall be 88 equity shares of PFC of INR 10/- each fully paid up for every 100 equity shares of
REC of INR 10/- each fully paid up to be issued to the shareholders of REC as existing on a record date to
be determined by the Boards of PFC and REC (as may be applicable) at a future date.
Advisors
Deloitte Touche Tohmatsu India LLP is acting as Transaction and Tax Advisor and Cyril Amarchand
Mangaldas as the Legal Advisor, to both PFC and REC. Further, RBSA Valuation Advisors LLP was
appointed by PFC and Ernst & Young Merchant Banking Services LLP was appointed by REC, for
providing joint valuation reports. SBI Capital Markets was appointed by PFC and Nuvama Wealth
Management was appointed by REC, for providing their respective fairness opinions on the joint valuation
reports.
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SK/ MD
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