Power Finance Corporation Ltd (PFC) has acquired 52.63 percent of the Government of India’s stake in Rural Electrification Corporation Limited (REC), making the latter its subsidiary as part of a major restructuring of public sector power financiers.
The acquisition follows in-principle approval by the Cabinet Committee on Economic Affairs (CCEA) and aligns with the Union Budget 2026 roadmap, which proposed consolidating key non-banking financial companies (NBFCs) in the energy sector to improve scale, efficiency, and credit support.
With the majority stake purchase now completed, REC and PFC are operating under a holding company–subsidiary structure. PFC’s board has also granted in-principle approval for a future merger of the two entities, subject to statutory clearances and detailed structuring.
The proposed merger aims to consolidate PFC and REC into a single balance sheet, enhancing the combined entity’s ability to support higher credit disbursement for power and infrastructure projects, and improve operational efficiencies across lending activities.
PFC and REC are among India’s key public sector NBFCs focused on financing power sector infrastructure, including generation, transmission, distribution, and renewable energy projects. The consolidation move is part of the government’s broader strategy to strengthen the role of public sector financial institutions in driving energy transition and national infrastructure development.
Under the Budget 2026 proposal, the restructuring of PFC and REC is aimed at achieving scale and improving efficiency within the public sector NBFC segment, with an emphasis on expanding credit outreach while supporting technology adoption and operational effectiveness.
