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The board of directors of One 97 Communications which is listed under the brand name Paytm, on Saturday approved the proposal to pump in 950 crore in their newly formed joint venture general insurance company for 10 years. The investment will be made in trances and will result in Paytm holding an upfront equity stake of 74% in the JV.

Following the investment, Paytm General Insurance will become a subsidiary of Paytm.

Incorporated in 2018, PGIL plans to register for and undertake general insurance business defined under Section 2(6B) of the Insurance Act, 1938 ("Insurance Act").

Notably, PGIL is yet to commence its general insurance business which is currently subject to receipt of the certificate of registration from IRDAI.

At present, One 97 holds a 49% stake in PGIL, while the remaining 51% is held by VSS Holdings Private Limited ("VHPL"), a company owned and controlled by Vijay Shekhar Sharma.

Vijay Shekhar Sharma is the Managing Director and CEO of Paytm.

Post the completion of the transaction, PGIL will become a wholly-owned subsidiary of Paytm where the latter will hold about 74% shareholding, and the remaining 26% stake will be held by VHPL.

In its regulatory filing, Paytm said, "both the Company and VHPL (i.e. the existing shareholders of PGIL) would make primary infusion of capital in PGIL at the same price."

Paytm intends to utilise the proposed investment for setting up the general insurance business of PGIL and scaling up its operations, besides maintaining the minimum solvency margin as prescribed under the applicable insurance laws and regulations.

Also, it needs to be noted that Group companies do not have any interest in PGIL.

After receiving IRDAI certification of registration, PGIL intends to carry on general insurance business to offer a host of general insurance products under personal lines and commercial lines insurance including private car, two-wheeler, health insurance, property, and liability insurance.

On Friday, Paytm shares closed at 575.35 apiece up by 3.90% on BSE.

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