The move marks a key step in creating a large power financing entity, following earlier in-principle approvals from both boards and a government push in the FY27 Budget.
State-run PFC said on Saturday that its Board of Directors have reserved the proposal for the merger of the Maharatna company with REC and seeks the approval of the President of India for the same.Now, the Chairman and Managing Director of PFC will move to seek approval from the President of India, indicating that the merger process is progressing.In a regulatory filing on BSE, PFC said “Board of Directors at its meeting held today (Saturday) have inter alia reserved the proposal for merger of REC into PFC for the approval of the President of India and approved the authorisation to the CMD of PFC to make an application to, and seek the approval of, the President of India for the said proposed merger of REC into PFC.”Post-merger structure and asset transfer detailsUpon the merger being duly approved under applicable law and being made effective, all the assets and liabilities of REC shall be transferred to PFC, and REC shall stand dissolved, it added.In February 2026, the PFC and REC Boards in principle approved the merger of the two entities. This comes after the Finance Minister, in her FY27 Budget speech, proposed merging the two NBFCs.Scale of combined lending and sector exposureThe two Maharatna companies manage loan books of roughly ₹6 lakh crore each, with loans to the distribution segment as the mainstay at about 40 per cent each. Both have 12-15 per cent exposure to renewable energy generation projects, and both have forayed into non-power sectors such as financing infrastructure projects covering roads and ports.Creation of a power financing behemothThe merger will create a financing behemoth focused on funding large-scale, complex projects in the power and related infrastructure space,, including AI-enabled data centres.According to a businessline explainer, the merger could spawn a power financing behemoth with a loan book of ₹11.5 lakh crore, as large as Canara Bank, which is the seventh largest bank in India.Published on May 16, 2026
