Paytm-Insuretech deal rejected by regulator

Paytm's links with Chinese investors might have halted approval by Irdai

- SUBHOMOY BHATTACHARJEE 

The proposed buyout of general insurance company RahejaQBE by Paytm Insuretech has not found favour with the Insurance Regulatory Development Authority of India (Irdai), sending the deal back to the drawing board again.

The rejection of the deal will hamper the investment plans of several domestic and multinational insurance companies like Swiss Re that are hoping to expand their presence in India's fast-growing general insurance business. The deal would have also tied in with the government relaxing foreign direct investment (FDI) limit in the sector from 49 per cent to 74 per cent the FY22 Budget.

The Paytm Insuretech deal was announced in July 2020 and its closure was expected by the end of FY21, with IRDAI approval. But it has been extended repeatedly, while One97 Communications, the parent company of both Paytm and Paytm Insuretech, has tried out various investment options for a 100 per cent buyout of RahejaQBE.

It is learnt that the IRDAI is not comfortable with the investment pattern offered by One97 Communications mainly because Chinese companies like Ant Financial have invested in it. The Government of India feels that insurance is a sensitive sector and, therefore, a Chinese exposure in it is a problem.