“The boards of directors of Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) Limited have approved a scheme of merger for the two power sector companies,” according to an official statement issued on Monday (June 29, 2026).

The merger will create a financing entity with an aggregate loan book of more than ₹11 lakh crore. “The merger has been approved under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013,” the statement said.

“The board of directors of PFC and REC Limited approved the Scheme of Merger (Scheme) for merger of REC (Transferor Company) into PFC (Transferee Company) and their respective shareholders and creditors, under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013,” it said.

Pursuant to the scheme and valuation report, the share exchange ratio for the proposed merger of REC into PFC shall be 88 equity shares of PFC of ₹10 each fully paid up for every 100 equity shares of REC of ₹10 each fully paid up to be issued to the shareholders of REC as existing on a record date to be determined by the boards of PFC and REC.

Deloitte Touche Tohmatsu India LLP is acting as transaction and tax advisor and Cyril Amarchand Mangaldas as the legal advisor, to the two non-banking financial companies.

PFC had appointed RBSA Valuation Advisors LLP while REC appointed Ernst & Young Merchant Banking Services LLP to provide joint valuation reports.

SBI Capital Markets was appointed by PFC and Nuvama Wealth Management was appointed by REC, for providing their respective fairness opinions on the joint valuation reports.

Power Finance Corporation (PFC), which is a public sector listed company that finances power infrastructure projects, is set to raise ₹5000 crore from the debt capital market to refinancing existed debt and further lending.

PFC announced that the base issue will be ₹500 crore with an option to raise the rest ₹4500 crore later on. The public debt issue consists of secured, taxable, redeemable, non-convertible debentures (NCDs) of face value of ₹1,000 each. The zero coupon debentures have a face value of ₹1 lakh each. The NCDs are AAA rated by credit rating agencies. The NCD will list on National Stock Exchange (NSE).

The minimum application size of a bond is ₹10,000–lots of 10 NCDs–and thereafter in multiples of Rs. 1,000 thereof. This applies only to Series I,II and IV bonds. Series III are zero coupon bonds, which can be bought in lots of one. .Series one matures in five years, series two with 10 years, series three in 121 months, followed by Series four and five in 15 years. Coupon rates are the fixed interests that holders would receive for a bond. As value or prices of bonds fall, the effective yield, which is the actual return that new investors in the bond gets if they hold to maturity, increases. The coupon rates itself do not change. Effective yield for NCD holders in various categories ranges from 6.85% to 7.30% per annum. Investors can apply for the debt issuance between January 16 and January 30 2026.