RBI Grants NOC for PFC-REC Merger

The Reserve Bank of India (RBI) issued a No-Objection Certificate (NOC) to REC Limited on 15 October 2026 for its proposed merger into Power Finance Corporation Limited (PFC). The proposed scheme places REC as the transferor company and PFC as the transferee company, with a combined loan book exceeding ₹11 lakh crore.

Merger Scheme and Share Swap

The boards of REC and PFC approved the merger scheme on 28 June 2026. Under the proposed share-swap ratio, shareholders holding 100 shares of REC would receive 88 shares of PFC. The scheme is structured as an amalgamation under Sections 230–232 of the Companies Act, 2013. REC and PFC are financial institutions operating in the power sector. PFC was established in 1986, while REC was established in 1969. Both are non-banking financial companies (NBFCs) regulated by the RBI.

Regulatory and Statutory Approvals

The RBI’s NOC is subject to conditions and instructions issued by the central bank; the complete terms were not reproduced in the companies’ exchange filings. The NOC does not bring the merger scheme into effect. The scheme still requires approvals from the shareholders and creditors of both companies, along with other applicable statutory and regulatory clearances. A scheme of arrangement under Sections 230–232 of the Companies Act, 2013 is subject to the prescribed approval process, which can include sanction by the National Company Law Tribunal (NCLT).

Companies and Their Roles

REC Limited, formerly known as Rural Electrification Corporation Limited, was established to finance rural electrification and power-sector projects. Power Finance Corporation Limited is a central public sector enterprise under the Ministry of Power and provides financing to the power sector. The proposed amalgamation would combine the two companies’ lending operations and assets under PFC, subject to completion of the approval process. The stated aggregate loan book of the combined entity would exceed ₹11 lakh crore.

Important Facts for Exams

:

• The Reserve Bank of India regulates non-banking financial companies in India under the Reserve Bank of India Act, 1934.
• Sections 230–232 of the Companies Act, 2013 deal with compromises, arrangements and amalgamations.
• The National Company Law Tribunal is the adjudicating authority for company-law matters, including specified merger schemes.
• REC Limited was established in 1969, and Power Finance Corporation Limited was established in 1986.

The proposed scheme identifies REC Limited as the transferor and Power Finance Corporation Limited as the transferee. The merger will take effect only after the required approvals and clearances are obtained.