Power Finance Corporation Limited (PFC) and REC Limited (REC) have approved a Scheme of Merger under Sections 230 to 232 of the Companies Act, 2013. The proposal is for REC, the transferor company, to merge into PFC, the transferee company. If completed, the merger would consolidate two major public-sector financiers into a single lending institution for India’s power sector.
What happened
The two Boards of Directors approved the merger scheme along with arrangements for shareholders and creditors. The merged entity is projected to have an aggregate loan book of over INR 11 lakh crore, making it a very large government-linked financing entity in the infrastructure-credit space.
Background and earlier position
REC and PFC are both public-sector financial institutions that finance power and infrastructure-related projects. The merger proposal follows a common corporate restructuring route under the Companies Act, 2013, where a scheme of arrangement requires approval from shareholders, creditors, and relevant regulators before it can take effect.