Mahindra Finance Ventures Into Insurance Distribution
Mahindra and Mahindra Financial Services (Mahindra Finance) are set to venture into the distribution of general, life and health insurance.
The company's board, during its recent meeting, greenlit the pursuit of additional business activities involving soliciting and procuring insurance across life, health and general sectors, catering to both group and individual schemes.
This strategic decision, as outlined in an exchange filing, is contingent upon securing necessary approvals from the Insurance Regulatory and Development Authority of India (IRDAI) and obtaining no-objection from the Reserve Bank of India and other regulatory bodies.
Mahindra Finance highlighted in the filing that obtaining the corporate agency license would offer diversified income sources. They anticipate the net fee income from this new business endeavour to range between 0.1-0.2 per cent of their standalone average assets over the next one-to-three years.
To initiate this venture, the company plans an initial investment between Rs 5-10 crore, allocated toward technology infrastructure, manpower acquisition, training and certification expenses.
Recent trends have seen numerous non-bank lenders seeking corporate agent licenses from IRDAI. This move provides an avenue for such institutions grappling with high fund costs to generate fee-based revenues.
In a similar vein, Capri Global Capital recently announced obtaining a corporate agency license from IRDAI. Grihum Housing Finance, previously known as Poonawalla Housing Finance, has also applied for a corporate agency license, mirroring the industry's interest in diversification.
