Power Finance Corporation Ltd (PFC) has completed the acquisition of the Government of India’s 52.63 percent equity stake in REC Limited, formally making REC a subsidiary of PFC. The move marks a significant step in the consolidation of public sector financial institutions supporting India’s power and infrastructure sectors.
The transaction was carried out in line with prior government approvals and reflects the Centre’s broader strategy to strengthen the balance sheets and operational efficiency of state-owned non-banking financial companies (NBFCs). With this acquisition, PFC assumes majority ownership and control of REC, while both entities continue to operate within the regulatory framework governing listed companies.
In parallel, the Board of Directors of PFC has granted in-principle approval for the merger of REC with PFC, subject to statutory, regulatory, and shareholder clearances. The proposed amalgamation aligns with the government’s roadmap for rationalising public sector enterprises and creating stronger, more competitive financial institutions capable of supporting large-scale infrastructure development.
Once merged, the combined entity is expected to benefit from enhanced lending capacity, improved capital efficiency, and operational synergies. The consolidation is also seen as a strategic move to strengthen financing for India’s power generation, transmission, distribution, and renewable energy projects, particularly as the country accelerates its energy transition and infrastructure expansion.
REC, which began as a lender focused on rural electrification, has evolved into a diversified infrastructure financier with a strong presence across the power value chain. PFC, meanwhile, has played a central role in funding India’s power sector growth, with a substantial loan portfolio and strong access to domestic and international capital markets.
The merger proposal will now proceed through the required regulatory and approval processes. Until the completion of the amalgamation, REC will continue to function as a subsidiary of PFC under the existing ownership structure.
