Paytm to focus on insurance distribution after IRDAI accepts registration withdrawal plea, stock rises

Paytm stock has gained around 16 percent in past five sessions, boosted by circuit limit revision and business updates.

Paytm shares edged higher on June 13 as the fintech's parent One97 Communications will now focus on distribution of insurance products of other insurers, after IRDAI accepted Paytm General Insurance's registration withdrawal application, the company informed stock exchanges on June 13.

Paytm General Insurance Limited had approached the Insurance Regulatory and Development Authority of India (IRDAI) for the withdrawal of its application for registration as a "General Insurance Company" to be a manufacturer of general insurance products.

"The move aligns with our focus towards doubling down on insurance distribution across Health, Life, Motor, Shop & Gadgets segments, facilitated through our wholly-owned subsidiary Paytm Insurance Broking Private Ltd(PIBL)," Paytm said.

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Paytm said it aims to innovate on small ticket insurance products for consumers and merchants alike, by focusing on small-ticket general insurance offerings along with its partners, and leveraging the strength of Paytm's distribution. Paytm hopes this will also increase the insurance penetration in India to a wider audience.

Paytm's similar approach to its loan business got mixed reviews from brokerages, with Bernstein saying that a permanent shift to distribution-only loans would create "a much weaker model" as it will be more of a loan distribution agent, while being a loan service provider adds more value.

Paytm is also said to be undergoing restructuring, and earlier this week it was reported that the company is looking to terminate a number of employees as part of a plan. However, Paytm has denied this, stating that no fresh layoffs have been undertaken. A company spokesperson told a news agency that it is providing outplacement support to employees that have “resigned”.

Besides, Moneycontrol had reported earlier this week said that Paytm CEO and founder Vijay Shekhar Sharma is reaching out to key former employees, Renu Satti, Kiran Vasireddy and Nehul Malhotra among others, in a bid to strengthen revival plans.

“Talks with Vasireddy and Malhotra, who could be leading the user growth initiative at Paytm, were initiated sometime back. Vijay has been in touch with his close aides and wants to rebuild the whole team as he takes direct charge of each business,” sources told publication.

Also Read | Tech3 | VSS dials former execs to rebuild Paytm amid layoffs; New age firms' top bosses strike it rich; and more

Paytm shares ended 5.5 percent higher in the previous session at Rs 401.50 on the National Stock Exchange. The stock has gained around 16 percent in past five sessions, boosted by circuit limit revision and business updates.

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