Why in News?
The Ministry of Power has constituted a high-level committee and a working group to facilitate the merger of PFC and REC.
Description:
Key Entities:
| Feature | Power Finance Corporation (PFC) | REC Limited (Formerly Rural Electrification Corporation) |
| Established | 1986 | 1969 |
| Legal Status | Maharatna CPSE | Maharatna CPSE |
| Classification | NBFC | NBFC |
| Ministry | Ministry of Power | Ministry of Power |
| Core Role | Comprehensive power sector financing | Specialized focus on Rural Electrification |
| Inter-entity Relationship | Holding Company (Parent) | Subsidiary (of PFC) |
| Key Event (2019) | Acquired 52.63% equity of REC from the Government. | State-held shares were transferred to PFC. |
Regulatory Profile: PFC & REC:
- Classification: Both are Non-Banking Financial Companies (NBFCs) designated as Infrastructure Finance Companies (IFC).
- RBI Framework: Regulated under the Scale-Based Regulation (SBR) framework.
- Systemic Importance: Categorized in the NBFC Upper Layer (NBFC-UL)
- Financial Nature: They do not accept demand deposits (unlike commercial banks).
- Funding Mechanism: Primarily raise capital through bonds (domestic/offshore), market borrowings, and long-term loans.
Maharatna Status:
Maharatna CPSEs can invest up to 15% of net worth in a single project, subject to an overall ceiling of 30% of net worth, not exceeding ₹5,000 crore per project (whichever is lower), without prior government approval.
La Excellence IAS Academy, the best IAS coaching in Hyderabad, known for delivering quality content and conceptual clarity for UPSC 2026 preparation.
FOLLOW US ON:
◉ YouTube : https://www.youtube.com/@CivilsPrepTeam
◉ Facebook: https://www.facebook.com/LaExcellenceIAS
◉ Instagram: https://www.instagram.com/laexcellenceiasacademy/
GET IN TOUCH:
Contact us at info@laex.in, https://laex.in/contact-us/
or Call us @ +91 9052 29 2929, +91 9052 99 2929, +91 9154 24 2140
OUR BRANCHES:
Head Office: H No: 1-10-225A, Beside AEVA Fertility Center, Ashok Nagar Extension, VV Giri Nagar, Ashok Nagar, Hyderabad, 500020
Madhapur: Flat no: 301, survey no 58-60, Guttala begumpet Madhapur metro pillar: 1524, Rangareddy Hyderabad, Telangana 500081
Bangalore: Plot No: 99, 2nd floor, 80 Feet Road, Beside Poorvika Mobiles, Chandra Layout, Attiguppe, Near Vijaya Nagara, Bengaluru, 560040