Fintech unicorn Slice has recently announced its acquisition of a 5% stake in North East Small Finance Bank, an Indian bank based in Guwahati. This acquisition is a significant milestone for Slice, as it navigates through mounting challenges from the Reserve Bank of India. The central bank has recently imposed strict compliance guidelines on many fintech startups operating in lending and cards categories. This has caused concerns for young firms in the industry, and Slice is no exception.
Slice invested $3.42 million for the 5% stake in North East Small Finance Bank in September, according to a regulatory filing. Although it is unclear how the acquisition will immediately benefit Slice, the company has a valuation of $1.55 billion, and counts Tiger Global, Insight Partners, Blume Ventures, and Axis Bank among its backers. The acquisition could be a shrewd move for Slice in the long-term.
Banks and fintech startups in India are exploring new ways to improve their engagements, with larger banks such as HDFC and ICICI expanding their reach into the sector. However, the central bank’s recent crackdown on predatory China-linked lending apps has created challenges for many firms, even those not involved in bad-faith business practices.
North East Small Finance Bank is a subsidiary of RGVN (NE) Microfinance that serves customers in the northeastern region of India. The bank counts Pi Ventures, SIDBI Venture Capital, and Bajaj Group among its backers. With this investment, Slice has acquired a rare and ostensibly significant milestone by a startup, which analysts believe could potentially benefit the fintech firm in the future.
The rise in proliferation of some predatory China-linked lending apps in recent years in the South Asian market has forced the hands of the central bank to introduce rules that have far-reaching implications for many firms. The Reserve Bank of India’s introduction of new rules has clipped the wings of many fintech startups operating in lending and cards categories. As a result, the acquisition by Slice could be seen as a bold and strategic move, as it navigates through the challenges of the industry.
Despite the challenges of the industry, India remains an interesting phase of time as banks and fintech startups continue to explore ways to improve their engagements. The Indian arm of SBM Bank, for example, began engaging with investors to raise capital late last year, pitching the vision of becoming one of the top banking-as-a-service providers in the country, according to TechCrunch. Accel and Quona backed Shivalik Small Finance Bank last year.
