Power Finance Corporation Ltd. and REC Limited have provided comprehensive details about their proposed merger implementation and expected synergies, following the in-principle board approval granted on February 6, 2026. The companies issued a joint regulatory filing on February 12, 2026, outlining the strategic framework for creating India's largest power sector financier.

Budget Announcement and Board Approval

The merger proposal originated from the Finance Minister's announcement on February 1, 2026, under paragraph 43 of the Union Budget 2026-27 speech. The budget outlined the government's vision for NBFCs in achieving Viksit Bharat with clear targets for credit disbursement and technology adoption.

The boards of both PFC and REC accorded in-principle approval for restructuring in the form of a merger during their respective meetings held on February 6, 2026. The merged entity will continue to remain as a "Government Company" under the Companies Act, 2013 and other applicable laws.

Strategic Synergies and Market Position

The merger is designed to create substantial synergies as India moves towards Viksit Bharat 2047 goals. The power sector will require significant capital investment, and the consolidated entity is expected to benefit from improved balance sheet strength, capital efficiencies, and operational synergies.

The combined entity will focus on emerging technologies including Green Hydrogen, CCUS, small modular nuclear reactors, and energy storage solutions. Based on consolidated metrics, the merged entity would be positioned as the largest power sector financier in India.

Implementation Framework

The companies have outlined key aspects of the merger implementation:

Government Entity Status: The merged entity will maintain its status as a Government company, with the Government of India retaining control including rights for appointment and removal of board members.

Professional Execution: Appropriate external agencies will be appointed, including consultants, valuation experts, and legal advisors to ensure structured, timely, and compliant execution subject to regulatory approvals.

Financial Structure and Compliance

Lending Business Compliance: Both entities currently operate well within RBI's credit concentration norms for single and group borrower exposures. Post-merger, these limits will apply to the consolidated Tier I capital, with no breach of borrower exposure norms foreseen.

Borrowing Structure: The current outstanding borrowing mix comprises approximately 18% domestic bank/FI borrowings, 25% foreign currency borrowings, and 57% domestic bond borrowings.

Exposure Limits: Post-merger, a single-entity exposure limit of 20% would apply to the merged entity. The aggregate Tier I capital of the top ten Indian banks is approximately ₹18.00 lakh crore as per annual reports of March 31, 2025, providing adequate headroom for additional borrowings.

Strategic Continuity

PFC had acquired 52.63% equity stake in REC in 2019, making REC a subsidiary of PFC in line with Government of India's approval. The renewed momentum towards consolidation reflects continuity in strategic intent, representing a step towards creating a single, focused institution to address the evolving financing needs of the power sector.

The merger represents the first step in the government's initiative to restructure public sector NBFCs, potentially setting a precedent for similar consolidations in the sector while leveraging synergies to achieve greater operational efficiency in serving India's power and rural electrification financing needs.

Power Finance Corporation Limited announced its unaudited quarterly results for the third quarter and nine months ended December 31, 2025, demonstrating robust financial performance across its core lending operations to power, logistics, and infrastructure sectors.

Board Meeting and Regulatory Compliance

The Board of Directors convened on February 5, 2026, to approve the quarterly financial results under Regulation 33 of SEBI Listing Obligations and Disclosure Requirements Regulations, 2015. The meeting commenced at 11:30 AM and concluded at 1:30 PM, with proceedings scheduled to continue on February 6, 2026.

Newspaper Publication and Disclosure Requirements

Pursuant to Regulation 30 & 47 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the company published its unaudited financial results in newspapers on February 6, 2026. The publication was communicated to both National Stock Exchange of India Limited and BSE Limited on February 10, 2026, ensuring full compliance with disclosure requirements.

Financial Performance Highlights

The company reported impressive quarterly results with net profit increasing 14.7% year-on-year to ₹4,763.33 crore in Q3 FY26 compared to ₹4,154.92 crore in the corresponding quarter of the previous year. Total income for the quarter reached ₹14,655.84 crore, marking a substantial increase from ₹13,043.69 crore in Q3 FY25.

Nine-Month Performance

For the nine months ended December 31, 2025, Power Finance Corporation maintained its growth trajectory with net profit rising 12.1% to ₹13,726.77 crore compared to ₹12,243.24 crore in the same period of the previous year. Total income for the nine-month period increased to ₹43,184.76 crore from ₹38,160.36 crore, representing a growth of 13.2%.

Consolidated Performance

On a consolidated basis, the company demonstrated even stronger performance with total income reaching ₹29,094.81 crore in Q3 FY26 compared to ₹26,798.04 crore in the previous year. Consolidated net profit after tax stood at ₹8,211.90 crore, reflecting the robust performance across the group companies.

Dividend Declaration and Key Dates

The Board of Directors approved a third interim dividend of ₹4.00 per equity share, representing 40% on the face value of ₹10 per share for FY 2025-26. The company had previously paid ₹7.35 as interim dividend for the current financial year.