Summary
State-owned lender REC Ltd has scheduled a board meeting on June 28, 2026, to consider and approve its proposed merger with Power Finance Corporation (PFC). The development comes after the company received presidential approval earlier this month, bringing the long-awaited consolidation a step closer. Investors are closely tracking the merger as it could create one of India’s largest infrastructure financing institutions with a combined loan book of over ₹11.5 lakh crore.
Quick Snapshot
| Item | Details |
|---|---|
| Companies | REC Ltd & Power Finance Corporation (PFC) |
| Board Meeting | June 28, 2026 |
| Purpose | Approval of Merger Scheme |
| Current Status | Presidential Approval Received |
| Combined Loan Book | ₹11.5 Lakh Crore (Approx.) |
| Post-Merger Status | PFC to Remain Government Company |
| Sector | Power Finance & Infrastructure Lending |
Why REC and PFC Are in Focus
REC and Power Finance Corporation have become the centre of attention after fresh progress in their proposed merger. The two public sector financing giants already work closely in funding India’s power sector, and the proposed consolidation is expected to improve operational efficiency, reduce overlap, and strengthen their lending capabilities.
With the board meeting now scheduled, investors believe the merger process has entered its final phase.
REC Board to Consider Merger on June 28
REC informed stock exchanges that its Board of Directors will meet on June 28, 2026, to consider and approve the scheme of merger with Power Finance Corporation.
The meeting follows the approval granted by the competent authority through the Ministry of Power earlier this month, removing another major hurdle in the consolidation process.
If approved by the board, the merger will move closer to implementation after the remaining regulatory and legal formalities.
How the Merger Reached This Stage
The proposal was first announced during the Union Budget for FY2026-27 as part of the government’s broader plan to strengthen public sector non-banking financial companies (NBFCs).
Earlier this year, PFC’s board also gave its in-principle approval to merge REC into the company. Since PFC already owns a majority stake in REC following the government’s stake transfer completed in 2019, REC has been operating as its subsidiary for several years.
The proposed merger is therefore seen as a logical step toward creating a larger and more efficient financing institution.
Why the Government Wants This Merger
The government’s objective is to build a stronger financial institution capable of supporting India’s growing infrastructure and energy requirements.
A combined entity would have greater lending capacity, improved operational scale, and stronger financial flexibility to finance large projects across power generation, transmission, distribution, renewable energy, and infrastructure.
The merger is also expected to reduce duplication in operations and improve overall profitability.
PFC’s Recent Fundraising Adds Strength
Ahead of the merger, Power Finance Corporation strengthened its funding position by raising $300 million through five-year US dollar-denominated bonds.
The company became the first central public sector NBFC to access the international bond market after the Reserve Bank of India’s special swap facility announcement.
Strong participation from investors across Europe and Asia indicates healthy confidence in PFC’s credit profile and future growth prospects.
What Could Change After the Merger?
If the merger is completed, the combined loan portfolio is expected to exceed ₹11.5 lakh crore, placing the merged entity among India’s largest financial institutions focused on infrastructure financing.
The business mix is likely to remain diversified across conventional power generation, transmission, distribution, and renewable energy financing. A larger balance sheet could improve margins, enhance return ratios, and strengthen the company’s competitive position in financing large-scale energy projects.
Share Price Performance
Despite recent volatility, both stocks have delivered different performances over various timeframes.
| Company | Closing Price | 6-Month Return | 2026 Performance |
|---|---|---|---|
| Power Finance Corporation (PFC) | ₹432.65 | +22% | +19% |
| REC Ltd | ₹364.65 | +2% | Around -1% |
PFC has significantly outperformed REC in recent months, reflecting stronger investor sentiment ahead of the proposed consolidation.
Opportunities
- Creation of one of India’s largest infrastructure financing institutions.
- Better operational efficiency after combining resources.
- Stronger focus on renewable energy financing.
- Improved ability to fund large infrastructure projects.
- Potential improvement in profitability and return ratios.
Risks
- Final regulatory approvals are still pending.
- Integration of operations could take time.
- Any delay in implementation may affect investor sentiment.
- Changes in interest rates or government policies may impact lending business.
What Investors Should Watch
The June 28 board meeting will be the immediate trigger for both stocks.
Investors should closely monitor the board’s decision, the proposed share-swap structure (if announced), regulatory approvals, and management commentary regarding integration plans.
The pace of execution after the merger will play an important role in determining the long-term value creation for shareholders.
Frequently Asked Questions
Why are REC and PFC merging?
The government aims to create a larger and more efficient public sector NBFC capable of financing India’s expanding power and infrastructure sectors.
When is the REC board meeting?
REC’s Board of Directors is scheduled to meet on June 28, 2026, to consider and approve the merger scheme.
Will PFC remain a government company after the merger?
Yes. According to the proposal, Power Finance Corporation will continue to remain a government-owned company after the merger.
What is the expected size of the merged entity?
The combined loan book is estimated to be around ₹11.5 lakh crore, making it one of the largest infrastructure-focused lenders in India.
Disclaimer
This article is for informational purposes only and should not be considered investment advice. Investors should review official company filings and consult a qualified financial advisor before making investment decisions.