In a monumental development, Slice, the Indian fintech unicorn celebrated for its credit card-like services, has received the green light from the Reserve Bank of India (RBI) for its merger with North East Small Finance Bank (NESFB). This momentous announcement marks a rare achievement in the world of financial technology and holds the potential to reshape banking services and expand financial inclusion across India.
Slice’s reputation as a provider of over 400,000 monthly cards, surpassing both fintech and traditional banking institutions, is set to soar even higher through this merger with NESFB, based in Guwahati. Together, they aim to cater to a wider customer base, particularly those who have been underserved by conventional banking channels.
This strategic merger builds upon Slice’s earlier acquisition of a 10% stake in NESFB, setting the stage for a deeper and more synergistic partnership. Industry experts anticipate that this collaboration will empower the newly formed entity to enrich its product offerings and accelerate innovation, reinforcing its position in the fintech landscape.
The introduction of RBI guidelines had a profound impact on fintech startups like Slice, along with competitors like Uni, neobanks like Jupiter and Fi. These guidelines ushered in significant changes in card issuance practices and regulatory oversight. Slice’s founder and CEO, Rajan Bajaj, emphasized the company’s unwavering commitment to robust risk management and a customer-centric approach, attributes that have set it apart within the industry.
Slice proudly boasts a distinguished roster of investors, including Tiger Global, Insight Partners, Blume Ventures, and EMVC. In its last funding round just a year ago, the company was valued at approximately $1.5 billion. Notably, Slice’s initial investment in NESFB valued the bank at around $68 million. Insider reports confirm that at least two investors are actively discussing a combined investment of $125 million in the merged entity.
Established in 2016, NESFB operates as a subsidiary of RGVN (NE) Microfinance, serving customers in India’s northeastern region. It garners support from notable backers such as Pi Ventures, Bajaj Group, and government-backed SIDBI Venture Capital.
India, the world’s most populous nation, is witnessing a transformative shift in its banking landscape. Banks and fintech startups are increasingly forging partnerships to bolster their operations. Federal Bank and SBM Bank India have actively engaged with startups to enhance their business strategies, while major banks like HDFC, ICICI, and Axis are embracing fintech collaborations.
In the South Asian market, merging with a bank or securing a banking license remains a rarity, especially amidst heightened regulatory scrutiny. The central bank has been vigilant about the growing presence of tech giants in the financial services sector. Slice, holding an NBFC license for approximately five years, underscores its strong regulatory compliance.
The capital adequacy ratio of Slice-NESFB significantly exceeds the RBI-mandated 15%, reflecting a robust financial foundation. Insiders reveal that Slice’s current annualized revenue surpasses $100 million.
Rupali Kalita, Managing Director and Chief Executive of NESFB, expressed her enthusiasm about the merger, underscoring the collaborative effort to provide accessible and exceptional banking services that promote inclusive and responsible banking for all.