Fintech Unicorn Slice To Merge With North East Small Finance Bank

 

In a groundbreaking development, Indian fintech unicorn Slice has officially confirmed its merger with North East Small Finance Bank (NESFB). This announcement comes following the approval from the Reserve Bank of India (RBI), marking a rare feat in the financial technology sector. The collaboration between Slice and NESFB aims to revolutionize banking services and expand financial inclusion in India.

A Pioneering Merger in Indian Fintech

Slice, renowned for its credit card-like offerings, previously issued over 400,000 cards monthly, surpassing other fintechs and banks. This merger with Guwahati-based NESFB is expected to amplify their ability to serve a broader customer base currently underserved by traditional banking institutions.

This strategic merger follows Slice’s earlier acquisition of a 10% stake in NESFB, setting the stage for a deeper collaboration between the two entities. Industry experts anticipate that this partnership will enable the newly formed company to enhance its product offerings and accelerate innovation.

Reserve Bank of India’s Game-Changing Guidelines for Fintech

The Reserve Bank of India introduced guidelines that had a significant impact on fintech startups, including Slice, as well as competitors like Uni, neobanks Jupiter, and Fi. These guidelines brought about sweeping changes in card issuance practices and regulatory oversight. Slice’s founder and CEO, Rajan Bajaj, emphasized the company’s dedication to robust risk management and customer-centricity, which has set it apart in the industry.

Investment and Valuation

Slice boasts a distinguished group of investors, including Tiger Global, Insight Partners, Blume Ventures, and EMVC. In its previous funding round last year, the company was valued at approximately $1.5 billion. Notably, Slice’s initial investment in NESFB valued the bank at around $68 million. Already, at least two investors are in discussions to invest a combined $125 million in the merged entity, as confirmed by an insider.

North East Small Finance Bank

Established in 2016, NESFB operates as a subsidiary of RGVN (NE) Microfinance, catering to customers in India’s northeastern region. Its backers include Pi Ventures, Bajaj Group, and government-backed SIDBI Venture Capital.

India’s Changing Banking Landscape

India, as the world’s most populous nation, is experiencing a pivotal shift in its banking landscape. Banks and fintech startups are increasingly forming partnerships to bolster their operations. Federal Bank and SBM Bank India have actively engaged startups to enhance their business strategies, while larger banks like HDFC, ICICI, and Axis are embracing fintech collaborations.

Merging with a bank or obtaining a banking license remains a rarity in the South Asian market, especially given heightened regulatory oversight. The central bank has been cautious about the growing presence of tech giants in the financial services sector. Slice has held an NBFC license for approximately five years, reflecting its strong regulatory compliance.

Financial Strength and Vision

The capital adequacy ratio of Slice-NESFB is significantly higher than the RBI-mandated 15%. Slice’s current annualized revenue surpasses $100 million, according to insiders.

Rupali Kalita, Managing Director and Chief Executive of NESFB, expressed enthusiasm about the merger, emphasizing the collaborative effort to deliver accessible and exceptional banking services that promote inclusive and responsible banking for all.

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