Energy Finance Corp. Ltd’s board on Friday authorized the merger of its subsidiary REC Ltd into the father or mother, days after the Union Finances 2026-27 proposed restructuring of the 2 power-sector-focused non-banking monetary corporations (NBFCs).
The PFC board mentioned in a regulatory submitting that it will “make sure that, post-merger, PFC continues to stay as a ‘Authorities Firm’ underneath the Firms Act, 2013 and different relevant legal guidelines”, including that the detailed merger scheme, as soon as finalized, can be shared after requisite approvals.
These public-sector undertakings (PSUs) play a key function within the nation’s vitality transition plans and have a cumulative mortgage e-book of ₹11 trillion.
On Thursday, in an interview, Union finance minister Nirmala Sitharaman mentioned each the ministries of finance and energy will focus on and description the modalities of the proposed transaction. “What sort of a rationalization it is going to be, must be seen,” Sitharaman mentioned.
Whereas presenting the Finances 2026Sitharaman had mentioned the restructuring of each the power-sector-focused NBFCs is the preliminary step in direction of bettering the effectivity of public-sector NBFCs.
“The imaginative and prescient for NBFCs for ‘Viksit Bharat’ has been outlined with clear targets for credit score disbursement and know-how adoption. With the intention to obtain scale and enhance effectivity within the public-sector NBFCs, as a primary step, it’s proposed to restructure PFC and REC,” she mentioned in Parliament on 1 February.
REC grew to become PFC’s subsidiary in 2019 when the Centre offered its 52.63% stake in REC to PFC for about ₹14,500 crore. In 2022, the finance ministry rejected the facility ministry’s proposal to accord improvement finance establishment (DFI) standing to PFC Ltd.
Renwable vitality financing
The ‘Maharatna’ public-sector NBFCs, underneath the facility ministry’s management, present long-term financing and loans to fulfill the necessities of the nation’s energy sector. Up to now few years, each corporations have diversified their lending operations throughout a number of infrastructure sectors, together with roads and highways, aviation and port infrastructure.
As of 2024-25, PFC’s renewable mortgage portfolio stood at ₹81,031 crore, or 15% of its general mortgage e-book of ₹5.4 trillion. To date, PFC has supported the set up of 60 gigawatts of renewable vitality capability. In response to its annual report for 2024-25, PFC’s gross non-performing belongings had been at 1.94% of the mortgage e-book.
REC’s renewable vitality portfolio stood at ₹57,994 crore, or practically 1% of its practically ₹5.7 trillion mortgage e-book, on the finish of the final fiscal. As of March 2025, it supported the set up of 52GW of renewable vitality capability.
The restructuring, together with streamlining operations, would enhance the credit score move, in accordance with consultants.
“The restructuring of PFC and REC has the potential to materially form long-term financing capability, danger urge for food, and undertaking execution velocity throughout the sector,” mentioned Sambit Patra, companion at consulting main Bain & Co. in India.
Shares of PFC on BSE closed at ₹419.20, down 1.01% from its earlier shut on Friday, whereas these of REC Ltd fell 2.51% to ₹372.50 per share. On the finish of the buying and selling hours on Friday, the market capitalization of PFC stood at ₹1.38 trillion, whereas that of REC was ₹98,087 crore.