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Govt Eyes PFC-REC Merger Stake Retention
7 Apr
Summary
- Government aims to keep over 51% stake in merged PFC-REC entity.
- Options include preference shares or fresh equity issuance.
- Merged entity to be largest state-owned NBFC with enhanced capacity.
The government is actively considering methods to retain its majority 51% stake in the Power Finance Corporation (PFC) following its merger with the Rural Electrification Corporation (REC). Discussions are underway to explore options such as issuing preference shares or fresh equity to the government.
This strategic decision aims to ensure the merged entity, which will become the largest government-owned non-banking financial company (NBFC), maintains its status as a state-controlled entity. Currently, the government holds 55.99% in PFC and 52.63% in REC.
The proposed merger is expected to create a significantly larger financial institution with enhanced underwriting capabilities and risk absorption capacity. This will allow for greater diversification into sectors like renewables and transmission, improving its competitive standing.
The combined loan asset book of PFC and REC as of December 31, 2025, was approximately Rs 11.51 lakh crore and Rs 5.82 lakh crore, respectively. Both entities operate under the administrative control of the power ministry, financing various power sector projects.
