PFC-REC Merger Approved: ₹11 Lakh Crore Power Finance Giant, Share Swap Ratio, Record Date & What Investors Need to Know

The boards of Power Finance Corporation (PFC) and REC Limited have approved the long-awaited merger scheme, paving the way for the creation of India's largest power sector financing institution. Once completed, the merged entity will have a combined loan book of more than ₹11 lakh crore, significantly strengthening its ability to finance power generation, transmission, distribution, renewable energy, and large-scale infrastructure projects across the country. Under the approved scheme, REC shareholders will receive 88 equity shares of PFC for every 100 REC shares held on the record date. After the merger becomes effective, REC will cease to exist as a separate listed company, while PFC will continue as the listed entity. However, the merger is still subject to approvals from shareholders, stock exchanges, SEBI, the National Company Law Tribunal (NCLT), and other statutory authorities before it can be implemented.

The merger is aimed at creating a stronger government-backed financial institution capable of supporting India's rapidly growing energy and infrastructure requirements. By combining the strengths of both companies, the government expects to improve operational efficiency, enhance capital allocation, reduce duplication, strengthen the balance sheet, and increase lending capacity for future projects. The larger institution is also expected to benefit from improved borrowing capabilities, greater financial flexibility, and lower funding costs, allowing it to play a bigger role in financing renewable energy, transmission networks, battery storage, distribution reforms, green hydrogen projects, and other initiatives supporting India's long-term energy transition and infrastructure expansion.

For investors, the most important aspect of the transaction is the approved share swap ratio of 88 PFC shares for every 100 REC shares. The record date has not yet been announced, and only shareholders holding REC shares on the notified record date will be eligible to receive PFC shares. Existing REC shares will be cancelled once the merger becomes effective, and new PFC shares will be allotted according to the approved exchange ratio. At present, no action is required from shareholders until the companies announce the record date and receive all necessary regulatory approvals. Investors should closely monitor future announcements regarding shareholder meetings, SEBI observations, NCLT approval, and the final implementation timeline.

The proposed merger represents one of the biggest restructuring exercises in India's public sector financial sector and is expected to create a financially stronger institution with greater scale and long-term growth potential. With India expected to invest heavily in electricity generation, renewable energy, transmission infrastructure, and grid modernisation over the coming decades, the merged entity is likely to become the government's primary financing arm for the power sector. While the transaction still awaits regulatory clearances, the board approval marks a significant milestone toward creating a larger and more efficient institution capable of supporting India's infrastructure development and clean energy ambitions.

Particulars	Details
Companies	Power Finance Corporation (PFC) and REC Limited
Merger Status	Approved by both Boards
Share Swap Ratio	88 PFC shares for every 100 REC shares
Combined Loan Book	More than ₹11 lakh crore
Listed Entity After Merger	Power Finance Corporation (PFC)
REC Shares	Will be cancelled after merger completion
Record Date	Yet to be announced
Pending Approvals	Shareholders, SEBI, Stock Exchanges, NCLT and other statutory authorities
Objective	Create India's largest power sector financing institution
Expected Benefits	Stronger balance sheet, higher lending capacity, improved operational efficiency, lower borrowing costs, and enhanced financing for power and renewable energy projects

Why the Merger Matters

India is expected to invest trillions of rupees in electricity generation, transmission infrastructure, renewable energy, battery storage, and grid modernization over the coming decades.

A larger financing institution could play a crucial role in supporting:

• Renewable energy projects
• Green hydrogen infrastructure
• Transmission networks
• Distribution reforms
• Smart grid development
• Large-scale infrastructure financing

The merged company is also expected to become a key financing partner for India's Viksit Bharat 2047 vision.

PFC and REC Financial Snapshot

Particulars	PFC	REC
Net Worth (FY26)	₹1.73 Lakh Crore	₹85,054 Crore
Turnover (FY26)	₹1.15 Lakh Crore	₹59,584 Crore
Business	Power Sector Financing	Power Sector Financing

The merger combines two financially strong public sector lenders into one significantly larger institution.

REC Shareholding Pattern

Category	Approximate Holding
PFC	52.63%
Mutual Funds	More than 9%
Insurance Companies	Nearly 6%
LIC	Around 3%
Retail Shareholders	More than 11.69 Lakh Investors

Conclusion

The proposed merger between Power Finance Corporation and REC represents one of the most significant restructuring exercises in India's public sector financial landscape. By combining the strengths of two leading power financiers, the government aims to create a stronger institution capable of funding the country's rapidly expanding energy and infrastructure requirements. While the merger still awaits several regulatory approvals, investors should closely follow announcements related to the record date, shareholder approvals, and implementation timeline, as these will determine the next steps in the creation of India's largest power sector financing giant.

What is the PFC-REC share swap ratio?

REC shareholders will receive 88 PFC shares for every 100 REC shares held on the record date.

Has the record date been announced?

No. The record date will be announced after the required regulatory and shareholder approvals.

What will happen to REC shares?

REC shares will be cancelled once the merger becomes effective, and eligible shareholders will receive PFC shares based on the approved swap ratio.

Why are PFC and REC merging?

The merger aims to create a stronger, more efficient power financing institution with greater lending capacity to support India's energy transition and infrastructure development.

How large will the merged company be?

The merged entity will have a combined loan book of more than ₹11 lakh crore, making it India's largest power sector financing institution.