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PFC Becomes India's Second Largest State-Owned Financial Firm

Published on March 31, 2019
State-Owned Power Finance Corporation (PFC) has completed the acquisition of majority stake in REC Ltd by transferring Rs 14,500 crore to the Government.
PFC Becomes India's Second Largest State-Owned Financial Firm


  • The merger of both the entities is expected to be completed in the next fiscal year in consultation with the government.
  • This acquisition and merger will make PFC second-largest government-owned financial player in the country based on the current market capital after State Bank of India (SBI) and also PFC will be the third-highest profit-making financial player in India.

Details of the acquisition:

  • PFC paid Rs 14,500 crore to the Union Government to buy a 52.63% stake in REC.
  • This acquisition results in an $80-billion lending giant by assets and potentially helps in faster resolution of stressed assets in India's power sector.
  • The acquisition also helped the union government exceed its disinvestment target of Rs 80,000 crore for the fiscal year 2018-19.
  • The consolidation will help in raising funds at competitive costs and lead to convergence of lending policies and rates.
  • Further, it will also help in improving asset quality and impress upon state utilities to improve their performance.

Interesting to know:

  • PFC taking over REC makes it a dominant player not only in the power sector but also in the entire financial market space.
  • PFC's strategic importance to the government will further increase upon completion of the acquisition as the combined entity will become the biggest non-bank finance entity in which the government holds a controlling stake.
  • Since PFC and REC have a robust presence in the consortium of lenders to power companies, the consolidation will help in the faster resolution of stressed assets.


Q. Who has become India's second largest State-Owned Financial Firm after aquiring a majority stake in REC?
a. Power Finance Corporation (PFC)

b. Electricity Finance Corporation (EFC)
c. Urja Finance Corporation (UFC)
d. Power Finance Council (PFC)

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