PFC-REC merger likely to include preferential allotment to Centre to keep government company tag: Report

PFC-REC merger likely to include preferential allotment to Centre to keep government company tag: Report

• PFC and REC merger may involve share allotment to Centre to keep govt company status
• Centre may infuse Rs 16,000-17,000 crore equity to keep stake above 51 percent
• PFC and REC boards approved merger in principle post Budget 2026 announcement.

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The proposed merger scheme of Power Finance Corporation (PFC) and REC may include a preferential allotment of shares to the Centre so that the combined entity can retain its government company tag, Economic Times reported citing people familiar with the matter.

This comes as the merger may result in the Centre’s stake slipping well below 51 percent, affecting the entity’s status as a government company, the report further said, adding that the centre may need additional equity worth Rs 16,000-17,000 crore to maintain its stake above the limit needed to classify the entity as a government company.

A government official cited by the report said that the merger scheme is currently being prepared, and the infusion of equity by the government is one of the options that is being mulled.

Moneycontrol couldn't independently verify the report.

According to data on PFC’s shareholding pattern as on December 31, 2025, the central government held 55.99 percent stake in the company while the rest of the 44.01 percent stake was owned by the general public.

The government however didn’t directly own stake in REC during the same time, although it is listed as a promoter in the company. PFC meanwhile owned 52.63 percent stake in the company.

While presenting Union Budget 2026, In Budget 2026, Finance Minister Nirmala Sitharaman had announced, "The vision for NBFCs for Viksit Bharat has been outlined with clear targets for credit disbursement and technology adoption. In order to achieve scale and improve efficiency in the Public Sector NBFCs, as a first step, it is proposed to restructure the Power Finance Corporation and Rural Electrification Corporation."

The boards of the two state-owned lenders on February 6 approved the merger in principle, following the Union Budget announcement on restructuring PFC and REC.

PFC and REC shares both declined around 1 percent on February 12 to trade at Rs 410.65 apiece and Rs 350.30 apiece, respectively.

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