Power Finance Corporation received a No Objection Certificate from the Reserve Bank of India on October 15, 2026, regarding the proposed merger of REC Limited with and into PFC. This regulatory clearance marks a significant step in the consolidation of the two central public sector enterprises.

The certificate was issued subject to specific instructions and conditions outlined by the regulator. The development follows the board approval of the scheme on June 28, 2026, which was contingent upon receiving applicable regulatory and other approvals.

Regulatory Status and Next Steps

The proposed scheme involves the merger of REC Limited, acting as the transferor company, into Power Finance Corporation Limited, the transferee company. This action is undertaken under sections 230-232 and other applicable provisions of the Companies Act, 2013.

Despite the RBI's clearance, the scheme is not yet effective. It remains subject to several pending conditions:

• Approval from the respective shareholders of both companies.
• Consent from the creditors of both entities.
• Fulfilment of other statutory and regulatory requirements as mandated by law.

Disclosure Details

The intimation was made to the National Stock Exchange of India and BSE Limited under Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The disclosure confirms that the company has taken the receipt of the certificate on record.

Power Finance Corporation Ltd has incorporated a new wholly owned subsidiary, Kadapa II REZ Transmission Limited, to facilitate the integration of the Kadapa-II Renewable Energy Zone transmission system.

The new entity operates as a Special Purpose Vehicle (SPV) under PFC Consulting Limited (PFCCL), which is itself a wholly owned subsidiary of Power Finance Corporation. This structural setup aligns with the company's role as the Bid Process Coordinator for independent transmission projects nominated by the Ministry of Power.

Role as Bid Process Coordinator

PFCCL was nominated by the National Committee on Transmission (NCT) in its 42nd meeting held on July 7, 2026. The nomination was formalized via a communication from the Central Electricity Authority, Ministry of Power, dated July 20, 2026. As the Bid Process Coordinator, PFCCL is responsible for selecting developers through tariff-based competitive bidding.

Preparatory Activities and Project Structure

The incorporation of the SPV is mandated under tariff-based competitive bidding guidelines. The entity will undertake critical preparatory activities required before the bidding process concludes. These activities include:

• Preparation of detailed project profiles.
• Conducting surveys and preparing technical reports.
• Initiating land acquisition processes.
• Seeking forest clearance, if applicable.

Transfer Mechanism

The SPV is designed as a temporary vehicle for project development. Upon completion of the international competitive bidding process, the SPV will be transferred to the successful bidder. The selected developer will then assume responsibility for developing the transmission scheme. This mechanism ensures that regulatory and logistical hurdles are cleared by the coordinator before handing over the project to the private developer.