The Indian fintech startup Slice has merged with North East Small Finance Bank (NESFB), and the deal is a very rare instance of categorization in India’s most stringent banking sector. Proposed last year in November, the amalgamation process underwent a severe regulatory review and gave the Bengaluru-based firm the status of a bank.
Slice has emerged as a credit card-based digital payment and lending application that will now diversify into other services, including deposit accounts and investment products, as said in a letter of notification sent to customers on Sunday.
To be more precise, the application for a banking license in India has become almost next to impossible because the RBI has been rejecting applications, citing mainly the menace anchored on the previous features of banking failures and corporate governance problems such as Yes Bank and PMC Bank among other defaulted banks and microfinance institutions.
Though currently multiple fintech unicorns in India, the majority of them rely on bank partnerships to offer banking solutions, and their operations are always subject to changes in laws and regulations and the priorities of the partners. The merger also provides Slice with more efficient capital to make use of as well as management of the lending activities in-house, something that was before on Slice’s hands relied heavily on external parties.
Slice, which has raised funding from Tiger Global, Insight Partners, and others, was expected to be worth $1.5 billion at the time of the merger announcement last year. NESFB was established in 2016 as a subsidiary of RGVN Microfinance, with a major focus on the northeastern region of India.
“For over a year, the teams at Slice and NESFB have worked tirelessly to make this merger a reality,” said Rajan Bajaj, founder and CEO of Slice, in a statement. “Today, we’re thrilled to be at the starting line of building India’s most loved bank,” he added.
The bank’s major investors are Pi Ventures, Bajaj Group, and SIDBI Venture Capital Limited. Thus, Slice’s entrance into banking is a notable experiment showing that despite a highly regulated environment in India, startups can change traditional banking.
