New Delhi: The board of Power Finance Corporation on Friday granted in-principle approval for the proposed merger of Rural Electrification Corporation, a non-banking finance company, with itself, setting in motion a restructuring of two state-run lenders.
Under the proposal, PFC will survive as the merged entity and retain its status as a “government company” under the Companies Act, 2013 and other applicable statutes.
The decision follows Finance Minister Nirmala Sitharaman’s Budget announcement on Sunday that flagged consolidation of public sector NBFCs to boost scale, efficiency, credit disbursement and technology adoption for the ‘Viksit Bharat’ agenda.
PFC’s board “took note of the budget announcement and accorded its in-principle approval for restructuring in the form of a merger of PFC and REC, while ensuring that, post-merger, PFC continues to remain as a ‘Government Company’,” the company said in a regulatory filing.
REC has been a subsidiary of PFC since March 2019, when, after in-principle clearance from the Cabinet Committee on Economic Affairs, PFC purchased 52.63 per cent of the government’s stake in REC for Rs 14,500 crore.
Officials said details will follow.