Indian Fintech Unicorn Slice Merges with North East Small Finance Bank

Indian fintech unicorn Slice is set to merge with North East Small Finance Bank (NESFB), following approval from the country’s central bank. This merger is a milestone achievement in the fintech industry, a feat that many tech giants and top financial startups have not accomplished.

Slice and NESFB: A Combined Force for Financial Inclusion

Slice initially offered credit card-like cards and at peak issued over 400,000 cards in a month, more than any other fintech or bank. The merger with Guwahati-based NESFB will enhance the combined entity’s ability to serve their shared mission and reach more consumers lacking access to basic banking services.

The merger is also expected to boost the new entity’s product offerings and speed up its product iterations. This move follows Slice’s recent acquisition of a 10% stake in NESFB.

Unprecedented Merger Amid Regulatory Changes

Last year, The Reserve Bank of India (RBI) introduced a range of guidelines that impacted many startups, including Slice. These changes posed significant challenges to how these firms issued cards.

Slice founder and chief executive Rajan Bajaj stated that the startup has been working with NESFB for 12 months, a period that allowed the stakeholders to understand each other and develop a shared vision.

Investors Eyeing the Merged Entity

Reports suggest that at least two investors are already in talks to invest in the merged entity, committing about $125 million between them. However, Bajaj declined to comment beyond confirming the merger news.

NESFB’s Role and India’s Evolving Fintech Scene

NESFB, established in 2016, is a subsidiary of RGVN (NE) Microfinance that serves customers in the northeastern region of the country. The bank has been instrumental in providing banking services to underserved regions.

India, the world’s most populous nation, is at a crucial phase in banking, with banks and fintech startups establishing various partnerships. Startups are being increasingly engaged by banks such as Federal Bank and SBM Bank India to boost their businesses.

The Uncommon Phenomenon of Merging and Licensing

Merging with a bank or obtaining a banking license is uncommon in the South Asian market, especially as the regulator has increased its oversight in recent quarters. The central bank has largely rejected all applications for universal banks in recent years.

In contrast, the capital adequacy ratio of the Slice–NESFB is multiple-fold higher than the 15% mandated by the central bank. Slice’s current annualized revenue is a little over $100 million.

In a statement, Rupali Kalita, managing director and chief executive of NESFB, expressed excitement about the expansion of their reach and enhancement of their services through the alliance with Slice. The bank aims to continue bolstering its governance while delivering accessible and exceptional services to foster inclusive and responsible banking.