Slice bank merger scales approval

Indian fintech unicorn Slice is set to merge with North East Small Finance Bank, a move approved by India’s central bank. This merger marks a rare occurrence in the tech and financial sectors and aims to enhance financial services for consumers with limited access to banking.

Slice, known for its credit card-like cards and significant card issuance volume, believes that combining forces with the Guwahati-based bank will strengthen their shared mission and outreach. The merger, supported by Slice’s earlier acquisition of a 10% stake in the bank, is expected to boost product offerings and accelerate product development.

The Reserve Bank of India had introduced new guidelines that affected several startups, including Slice, leading to significant changes in card issuance practices. Despite these challenges, Slice and North East Small Finance Bank have been working together for a year, fostering mutual understanding and alignment.

Slice, valued at around $1.5 billion in its previous funding round, has secured investments from prominent backers like Tiger Global, Insight Partners, Blume Ventures, and EMVC. Its initial investment in North East Small Finance Bank valued the bank at approximately $68 million.

Investors are already showing interest in the merged entity, with discussions underway for investments totalling approximately $125 million.

This merger represents a notable development in India’s fintech landscape, particularly in the context of digital-first banking and financial services. North East Small Finance Bank, founded in 2016, primarily serves customers in the northeastern region of India and has received support from investors like Pi Ventures, Bajaj Group, and SIDBI Venture Capital.

India is experiencing a shift in its banking sector, with banks and fintech startups forming various partnerships to expand their offerings. Established banks like HDFC, ICICI, and Axis are also embracing this trend.

Mergers with or obtaining licenses for banks remain rare in India, where regulatory scrutiny has increased, particularly regarding tech giants’ involvement in financial services. This merger between Slice and North East Small Finance Bank signifies a unique collaboration to address the needs of underserved populations while leveraging innovative technology.

The capital adequacy ratio of the merged entity, Slice-North East bank, is significantly higher than the 15% mandated by the central bank. Slice currently generates an annualised revenue of slightly over $100 million.

Rupali Kalita, Managing Director and CEO of North East Small Finance Bank, expressed enthusiasm about the expansion of their services and the focus on customer experience, emphasising inclusive and responsible banking for all.