The cabinet is slated to review the PFC‑REC merger after the Finance Ministry’s green light, with Power Secretary Pankaj Agarwal confirming the government’s intent to issue preference shares.
The preference‑share package, pegged at roughly ₹800 crore, would allow the state to maintain its 51% ownership in the merged entity, sidestepping the need for a fresh equity raise. REC shareholders will receive 88 PFC equity shares for every 100 REC shares under the exchange‑rate clause.
Regulatory traction is strong: the Reserve Bank of India granted a no‑objection certificate on 15 October, while the National Stock Exchange and BSE issued observation letters on 19 October. The merger still requires statutory approvals and consent from creditors and shareholders.
Financially, the transaction could reduce upfront cash outlay for the government, though it may introduce interest obligations typical of preference instruments. Analysts will weigh the cost of the ₹800 crore issue against the long‑term benefits of a consolidated state‑run power finance group.
The merger is slated to take effect on 1 April 2027, pending all approvals. Market watchers note that any delay could ripple through the utilities sector, affecting liquidity and valuation multiples for both PFC and REC. The next key milestone is the Finance Minister’s approval, after which the proposal will head to the cabinet for final assent.