PFC's ₹50B Debenture Push and REC Merger Reshape India's Energy Finance Landscape
Power Finance Corporation (PFC) has taken significant steps to expand its role in India's energy sector. The company recently launched a ₹50 billion public issue of non-convertible debentures while moving forward with a merger plan involving REC Limited. These developments follow a strong financial performance and government-backed restructuring efforts.
In October 2019, PFC acquired a 52.63% stake in REC Limited from the Government of India, making REC its subsidiary. Since then, REC's market capitalisation has seen significant changes: it rose from around ₹1.2 trillion at the time of the announcement to over ₹1.8 trillion in 2021, dipped during market downturns in 2022–2023, and recovered to approximately ₹1.5 trillion by February 2026.
The PFC Board has now granted in-principle approval for a full merger between the two companies. If approved by regulators, the combined entity will remain under government control and form a major lender to India's power sector, with a particular focus on renewable energy projects. This move aligns with Finance Minister Nirmala Sitharaman's proposal in the Union Budget 2026–27 to restructure PFC and REC for greater efficiency and scale in public-sector non-banking financial companies (NBFCs).
Meanwhile, PFC reported strong financial results for the fourth quarter of 2024–25. Total revenue reached ₹292.85 billion, marking a 21.13% year-on-year increase from ₹241.76 billion in the same period last year. The company has also launched Tranche I of its public issue of secured, listed, and redeemable non-convertible debentures (NCDs), aiming to raise ₹50 billion (~$554.18 million).
The proposed merger between PFC and REC would create one of India's largest power sector lenders. With REC's market value recovering and PFC's revenue growing, the combined entity is expected to play a key role in financing renewable energy projects. The government's restructuring push further supports this consolidation in the public-sector NBFC space.
