Fintech Unicorn Slice Merges With North East Small Finance Bank; Gets RBI Nod – News18

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Last Updated: October 04, 2023, 15:18 IST

Indian fintech unicorn slice has merged with North East Small Finance Bank (NESFB). The two have received a nod from the RBI for the merger which would help them expand tech-enabled financial accessibility nationwide.

The banking regulator, the Reserve Bank of India has approved the deal and will see Slice becoming an SFB, a first-of-its-kind development in the fintech and banking space.

Bengaluru-based Slice was last valued at around US$ 1.8 billion during its previous fund raising last year. In March 2023, Slice had acquired a 5 percent stake in NESFB for a value of $3.4 million.

While the details of the shareholding of the merged entity is not known, going by the previous valuation and investment, it is likely that Slice shareholders will own a majority stake in the merged entity.

RBI officials have in the past mentioned that it is not in favour of fintechs gaining licences through backdoor by acquiring licence-holding regulated entities such as banks and NBFCs. The regulator had earlier approved Centrum Capital and fintech payments firm BharatPe to invest in Unity SFB. However, this is the first instance of a fintech firm becoming a bank.

However, the regulator’s approval for the merger indicated that the central bank has full confidence in the fintech’s shareholders to bring a sea change to the Small Finance Bank (SFB) landscape by advancing its financial inclusion goals.

Slice largely works with college students and new-to-job employees and used to provide them credit and payment services. NESFB has 208 branches across the seven North East states along with West Bengal and has largely focussed on customers from the rural areas and bottom of the pyramid segment.

“We’re grateful to the RBI for entrusting us with this immense responsibility. This approach allows us to serve a wider audience, including those often overlooked. We will further strengthen our risk underwriting through the use of technology and data. We see this as an opportunity to build a highly inclusive and responsible bank, underpinned by robust risk management and strong governance,” said Rajan Bajaj, founder and CEO, Slice.

Slice, which holds its own NBFC licence (for loans), PPI licence (for offering wallets, prepaid cards), and a TPAP licence (for offering UPI payments) has made some changes in the past 12 months.

Among the latest, the Tiger Global-backed firm terminated its partnership with SBM India to relaunch/power its own wallet ‘Slice Mini’, linked with UPI. This is in addition to its latest partnership with RuPay, to offer co-branded credit card. It separately offers loans via ‘Slice Borrow’ through its NBFC and partnerships.

Slice had previously invested $3.42 millionto acquire 5% stake in the bank. Rural focused-NESFB, which has 208 branches across the seven North East states along with West Bengal, will allow Slice to push its product offerings, including loans and co-branded credit cards, beyond its Tier 1 demography.

The seven-year-old bank is a subsidiary of RGVN (NE) Microfinance and counts Pi Ventures, Bajaj Group and government-backed SIDBI Venture Capital among its backers.

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