New Delhi, April 7 The government is exploring options, including the issuance of preference shares or fresh equity, to maintain a 51% stake in the state-owned Power Finance Corporation after its merger with REC, a senior official said.
Finance Minister Nirmala Sitharaman had announced the restructuring of Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) in the FY27 budget to help achieve scale and improve efficiency in the public sector NBFC sector.
"The government would like to retain a majority stake in the merged entity, as it would be the largest government-owned NBFC with a strategic presence. Discussions are underway to ensure that the government's stake in the merged entity does not fall below 51%," the official said.
According to the Companies Act, a 'government company' is one in which not less than 51% of the paid-up share capital is held by the central government, or by any state government, and includes a company that is a subsidiary of such a government company.
One of the options being discussed is the issuance of preference shares by PFC to the promoter, which is the government. The other option on the table is the issuance of fresh equity to the government. Both options will help the government increase its stake in PFC, ensuring that the merged entity remains a state-owned company, the official told