Indian fintech startup Slice recently announced the completion of its merger with North East Small Finance Bank, a move that sets it apart as one of the few startups to successfully venture into India’s heavily regulated banking sector. This merger, which was initially proposed last year, effectively transforms Slice into a banking entity based in Bengaluru, following extensive scrutiny from regulatory authorities.
Slice, known for its innovative credit card-like products, has assured its customers that it will continue to offer its digital payment and lending services while also branching out into traditional banking with new offerings such as savings accounts and investment products. This strategic expansion comes at a time when obtaining banking licenses in India has proven to be a challenging feat, with the Reserve Bank of India rejecting the majority of applications in recent years due to concerns stemming from past banking failures and governance issues.
Despite India being home to numerous fintech unicorns, many of these companies are required to collaborate with traditional banks in order to provide banking services, leaving them susceptible to regulatory changes and the shifting priorities of their banking partners. This explains the growing interest among startups and venture firms in establishing a presence in the banking sector within the country.
In a similar vein, Jupiter, another fintech player, was reportedly in advanced discussions to acquire a stake in the Indian branch of SBM Bank back in September. The merger between Slice and North East Finance Bank now grants Slice access to capital at a reduced cost and enables the startup to have direct oversight of its lending activities. Slice, with notable investors such as Tiger Global, Insight Partners, and Blume Ventures, was valued at approximately $1.5 billion at the time of the merger announcement.
Rajan Bajaj, the founder and CEO of Slice, expressed his enthusiasm for the merger, highlighting the dedicated efforts of both teams in making it a reality. Bajaj emphasized that this milestone marks the beginning of establishing what he hopes will become India’s most beloved bank. On the other hand, North East Small Finance Bank, established in 2016 as a subsidiary of RGVN Microfinance, caters to customers in India’s northeastern region and boasts investments from Pi Ventures, Bajaj Group, and SIDBI Venture Capital.
The successful merger between Slice and North East Small Finance Bank not only signifies a significant milestone for both entities but also underscores the growing trend of fintech startups making inroads into the banking sector in India. As Slice sets its sights on becoming a full-fledged banking institution, the stage is set for further innovation and competition in the country’s financial services landscape.
