RBI Grants NOC for Proposed Amalgamation of REC Limited into PFC
The Reserve Bank of India has issued a conditional No-Objection Certificate for the proposed merger of REC Limited into Power Finance Corporation Limited. The amalgamation will integrate the parent and subsidiary into a unified power-financing entity with a combined loan book exceeding ₹11 lakh crore.
What happened
The Reserve Bank of India (RBI) officially granted a conditional No-Objection Certificate (NOC) for the proposed scheme of merger of REC Limited with and into Power Finance Corporation Limited (PFC). REC Limited and PFC notified the stock exchanges, including NSE India and BSE, regarding the receipt of the regulatory NOC in compliance with SEBI regulations.
Under the approved corporate scheme, REC Limited acts as the transferor company and Power Finance Corporation Limited acts as the transferee company. The amalgamation is structured under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, following board approvals obtained by both companies in February and June 2026.
The approved scheme outlines a share swap ratio where REC shareholders will receive 88 fully paid-up equity shares of PFC with a face value of ₹10 each for every 100 equity shares of REC held on a designated record date. The merger remains subject to statutory clearances, approvals from shareholders and creditors, and sanction by the National CompanyLa Tribunal (NCLT).
Important dates
| RBI NOC Issuance | 15 October 2026 |
|---|---|
| Stock Exchange Disclosures | 15-16 October 2026 |
| Scheme of Merger Board Approval | 28 June 2026 |
| Initial PFC Acquisition of REC Stake | March 2019 |
📌 Static GK links
- Acquiring Company: Power Finance Corporation (PFC), established in 1986 under the Ministry of Power.
- Target Subsidiary: REC Limited, established in 1969 as Rural Electrification Corporation Limited under the Ministry of Power.
- PFC Stake in REC: 52.63 percent (acquired in March 2019 for ₹14,500 crore).
- Regulatory Framework: Both PFC and REC are systemically important non-deposit-taking NBFCs regulated by the RBI.
What candidates should do
- Note down the exact share swap ratio and the governing sections of the Companies Act for objective questions.
- Revise the static GK details regarding the establishment years and administrative ministries of PFC and REC.
- Understand the regulatory role of the RBI and NCLT in corporate amalgamations involving NBFCs.
PrepZen analysis
The RBI's NOC for amalgamating REC Limited into PFC marks a major milestone in consolidating public sector power financing institutions in India. Having acquired a controlling 52.63 percent stake in REC back in 2019, PFC's integration of its subsidiary creates a unified powerhouse with a loan book exceeding ₹11 lakh crore. For banking and regulatory aspirants, this development highlights the intersection of SEBI listing regulations, Companies Act provisions, and RBI oversight for systemically important non-banking financial companies (NBFCs). Exam questions from this topic are likely to focus on the share swap ratio, the 2019 acquisition history, and the statutory bodies involved in approving corporate mergers.
Practice questions
Q1. Which regulatory body officially granted the No-Objection Certificate (NOC) for the proposed merger of REC Limited into Power Finance Corporation (PFC)?
Q2. What is the approved share swap ratio for REC shareholders under the merger scheme with PFC?
Q3. In which year did PFC initially acquire the Government of India's 52.63 percent controlling equity stake in REC Limited?
PFC previously acquired controlling 52.63 percent equity stake during 2019.
Proposed corporate merger will integrate parent and subsidiary into unified entity.
🎯 Key Point: RBI approves NOC for amalgamation of REC into PFC.
FAQs
What is the main objective of the REC and PFC merger?
The merger integrates the parent company (PFC) and its subsidiary (REC) into a unified power-financing entity with an aggregate loan portfolio exceeding ₹11 lakh crore.
Which provisions of the Companies Act govern the amalgamation?
The amalgamation is structured under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013.
Is the merger effective immediately after the RBI's NOC?
No, the RBI NOC is conditional. The scheme remains subject to other statutory and regulatory clearances, approvals from shareholders and creditors, and final sanction by the National Company Law Tribunal (NCLT).
What ministry oversees both PFC and REC?
Both Power Finance Corporation Limited (PFC) and REC Limited operate as Central Public Sector Enterprises under the Ministry of Power.
Sources and references
- gktoday.in (www.gktoday.in)
- indianpsu.com (indianpsu.com)
- psuconnect.in (www.psuconnect.in)
- kalkinemedia.com (kalkinemedia.com)
Prepared by PrepZen for exam preparation. Consult the linked sources for original announcements and current details. Corrections policy. Spotted an error? Write to prepzen.app@gmail.com.
Practice Quiz — 17 October 2026
Q1. Regarding the appointment of Dr. Sudha Yadav as Governor of Karnataka, consider the following statements: 1. She is appointed by the President under Article 155 of the Constitution. 2. She is the first-ever woman Governor of Karnataka. 3. She replaced Thaawarchand Gehlot. Which of the statements given above are correct?
Q2. Bathukamma, the famous nine-day floral festival of Telangana, begins with 'Engilipula Bathukamma' and concludes with which of the following?
Q3. Which newly designated district was carved out of Kargil district to become the 8th district of the Union Territory of Ladakh?
Q4. Under which statutory act did the Reserve Bank of India sanction the Scheme of Amalgamation between Emirates NBD's Indian branches and RBL Bank?
Q5. What percentage of stake in REC Limited had Power Finance Corporation Limited (PFC) acquired in 2019 prior to the proposed merger?
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