The proposed merger will create India's largest power sector financing institution with a combined loan book of more than Rs 11 lakh crore. PFC currently holds a 52.63% stake in REC, while the Government of India owns a 55.99% stake in PFC.

The merger remains subject to approvals from shareholders, stock exchanges, the Securities and Exchange Board of India (SEBI), the National Company Law Tribunal (NCLT) and other statutory authorities. The record date for determining eligible shareholders has not yet been announced.

Analysts said the merger strengthens the long-term outlook for the combined entity by creating a larger financing platform for India's expanding power sector.

Power Finance Corporation is a Schedule-A Maharatna CPSE, and is a leading non-banking financial corporation in the country.

REC is a 'Maharatna' company under the administrative control of the Ministry of Power, Government of India, and is registered with RBI as Non-Banking Finance Company (NBFC), Public Financial Institution (PFI) and Infrastructure Financing Company (IFC).