One97 Communications Ltd., the owner and operator of payments firm Paytm on Saturday said it will move to a distribution-only model for insurance, adopting the same approach to what it announced for its loans business alongside its earnings two days ago.
The board of its wholly-owned subsidiary, Paytm Insurance Broking Pvt., has approved the withdrawal of its application with the Insurance Regulatory and Development Authority for registering as a general insurance company.
The unit “will be moving its focus away from the capital-intensive insurance manufacturing business and withdrawing its general insurance license application. This will also enable One97 Communications to conserve cash of Rs 950 crores, which was earmarked for investment in Paytm General Insurance Ltd.,” it said in an exchange filing.
The unit will now focus only on insurance distribution to Paytm consumers and small merchants and enterprises across various general insurance categories, including health, life, motor, shop, and gadgets.
The firm’s similar approach to its loan business got mixed reviews from brokerages, with Bernstein saying that a a permanent shift to distribution-only loans would create “a much weaker model”, as Paytm will be more of a loan distribution agent than a partner that adds more value as loan service provider.