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Informist, Thursday, Sept. 24, 2026

By Astha Oriel

NEW DELHI – The merger of Power Finance Corp. Ltd. and REC Ltd. is on track and is expected to be completed by Mar. 31, a senior Power Finance Corp. official told Informist Thursday. "Next year we have to bring common books. We have already informed the sector regulator and the line ministry also," the official said, adding that the merger will require approval from the Securities and Exchange Board of India. 

Notably, the post-merger integration work, especially related to manpower, will continue over the next year, according to the official. The consultants have been appointed, and many of the essentials are in place, the official said. The official, however, acknowledged that the merger should have taken place slightly faster. "But this will happen naturally because everyone will protect their turf. So, there is some competition. But otherwise once the share swap ratio is there, a date has been logged in. You can't keep it on forever; I mean, you have to close it now. So, the deal has to be closed," the official said, adding that the intention is to close the merger on Mar. 31, and to have a combined entity on Apr. 1. 

The merger of both non-banking financial companies was announced by the Finance Minister Nirmala Sitharaman in the Union Budget for 2026-27 (Apr-Mar) with an aim to achieve scale and efficiency in public sector non-banking financial companies. In FY19, PFC had acquired 52.63% shares in REC from the Government of India for INR 145 billion as part of the government's divestment initiative. The proposed merged entity will have an adequate headroom for additional borrowings, as per an exchange filing by Power Finance Corp. 

Before the acquisition, the entities were subject to an exposure limit of 20% each. After the government divested its stake in REC to Power Finance Corp., the combined exposure under the Reserve Bank of India's large exposure framework was capped at 25% of tier-I capital, down from the aggregate limit of 40% earlier. After the merger, a single-entity exposure limit of 20% would apply to the merged entity, Power Finance said.

For the June quarter, Power Finance reported a net profit of INR 47.45 billion on revenues of INR 139.93 billion and REC reported a net profit of INR 41.49 billion on revenues of INR INR 142.96 billion. Thursday, shares of Power Finance closed nearly 2% down at INR 339.35 on the National Stock Exchange and shares of REC closed 1% lower at INR 308.25. End

Edited by Pankaj Aher

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