PFC to Merge REC with Itself, exit PTC India to create mega power NBFC

State-owned Power Finance Corporation, in a regulatory filing said, it will merge subsidiary Rural Electrification Corporation with itself and also withdraw its nominee director from PTC India Ltd, in which it holds a 4.05% stake and is classified as a promoter.

The simultaneous PTC India exit appears to be part of strategic portfolio rationalisation ahead of the REC merger, though PFChas not disclosed the rationale beyond citing a January 16, 2026 Ministry of Power memorandum.

The decision came five days after Finance Minister Nirmala Sitharaman announced the restructuring in her Budget 2026-27 speech, signalling rapid execution of the government's plan to consolidate public sector NBFCs.

The merger will eliminate competition between India's two largest power lenders, creating concentration in energy infrastructure financing. The new entity will leverage cheaper funding costs and implicit sovereign backing to compete with private banks in infrastructure financing.

Details of the merger are awaited and must secure approvals from SEBI, NCLT, RBI, the Competition Commission, and shareholders of both companies.

The merger can accelerate clean energy investments in India. PFC's renewable energy portfolio grew 35% to ₹810.31 billion as of March 2025, while REC's green book was at ₹510 billion.

The combined renewable lending capacity positions the merged entity as India's largest green financier, capable of underwriting mega solar parks, offshore wind projects, and emerging technologies like green hydrogen and battery storage.

The merged entity, with its renewable energy portfolio and sovereign backing, could become eligible for UN-backed climate finance mechanisms—including Green Climate Fund resources, multilateral development bank co-financing, and concessional facilities from institutions like KfW or AFD that smaller NBFCs lack the scale and governance credibility.