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PFC REC merger stalls as government stake may dip below 51% and force a ₹25000 crore rescue
India
Published on 15 May 2026
Bond rules could be triggered if control drops
Power Finance Corporation and REC boards meet Saturday, but the proposed merger faces a major stumbling block: the Centre’s stake could fall below 51% in the combined entity. Analysts estimate that keeping majority control may require a capital infusion of about ₹25,000 crore, even as fiscal pressure rises with a weaker rupee, high inflation, and muted growth in these lenders. Bond covenants also demand government majority ownership, raising questions. The merger is still planned for April 1, 2027.
- PFC and REC boards meet May 16 to discuss the merger plan
- Centre’s post-merger stake may fall below the 51% majority threshold
- Analysts estimate a capital infusion of about ₹25,000 crore may be needed
- Bond covenants could treat dilution below 51% as a change in control
- Target date for merger remains April 1, 2027, subject to approvals
- Earlier approvals were in principle: Feb 6 after the Budget announcement
Read the full story at The Economic Times
This summarization was done by Beige for a story published on 
The Economic Times