PFC net up 3%, expects merger with REC by April 2027; flags concern over RBI norms

State-run power financiers Power Finance Corporation (PFC) and REC Ltd are targeting completion of their proposed merger by April 1, 2027, as the companies move ahead with creating a single-window financing platform for India’s power sector, said PFC chairman and managing director Parminder Chopra.

“Both PFC and REC boards have already given in-principle approval for restructuring and merger. For the process, we have also appointed legal advisers, transaction advisers, merchant bankers, and registered bankers,” said Chopra, adding that a detailed structure is currently under discussion and is subject to all regulatory approvals.


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PFC and REC are non-banking financial corporations under the Ministry of Power. The company on Wednesday reported a 3% rise in consolidated net profit restricted by prepayments by borrowers amid low interest rates and also reverses due to rupee depreciation.

Net profit for the quarter came in at Rs 8,597.61 crore against Rs 8,357.88 crore in the same quarter a year-ago.

During the quarter, total Income fell to Rs 28,856.60 crore from Rs 29,285.45 crore in the fourth quarter of the corresponding previous quarter.

Net interest income, a key profitability metric for lenders, fell 11% year-on-year to ₹10,833 crore from ₹12,109 crore in Q4 FY25.

Chopra explained that a lowering of interest rates scenario like the one seen last fiscal year leads to prepayments, and added that the loan book would have been higher at nearly 11% if not for the prepayments by borrowers. However, the company does not expect any more rate cuts by the Reserve Bank of India in FY27, and is aiming for a loan book growth of 10 per cent in FY27.

PFC, Chopra said, is aiming to borrow Rs 1.6 lakh crore in FY27 to fund the loan growth, but did not comment on the sourcing of funds given the ongoing geopolitical volatility.

Due to the ongoing West Asia crisis, for the full year the company recorded a mark-to-market and transaction losses of around Rs 1,500 crore on account of currency fluctuations linked to foreign borrowings. “On the borrowing front due to volatility in the exchange rate definitely there has been an adverse impact,” Chopra said.

However, the management noted that nearly 97% of its foreign currency borrowings are hedged, limiting the broader financial risk.

The company declared a final dividend of Rs 3.95 per equity share, subject to approval from shareholders. This is in addition to the interim dividends of ₹14.60 per equity share for FY25-26 already declared and paid during the year in four tranches.

Raised concerns with RBI over draft framework, Chopra said the management has raised concerns over the Reserve Bank of India’s draft framework for upper-layer NBFC classification, particularly proposed reductions in group exposure limits from 50% to 35%.

She said discussions with the RBI are underway and the company has submitted its concerns to the regulator. “On the capital front we are very comfortable, but there are other implications like the reduction in the group norms.”

The company added that it had previously qualified for upper-layer classification but had been placed in the middle layer under the draft framework.

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Last month The Reserve Bank of India (RBI) released draft amendment guidelines on the identification of Upper Layer (UL) NBFCs, along with changes to the classification of government-owned NBFCs.

Under the proposed framework, the RBI plans to do away with the existing parametric scoring model used to identify UL NBFCs, and instead shift to a simpler, asset size-based approach.

PFC’s scrip ended at Rs 446.10, up 1.23% on the BSE on Wednesday. The earnings were announced during market hours.