In an unprecedented move, the credit and payments unicorn, Slice, announced its merger with Guwahati’s North East Small Finance Bank (NESFB) on Wednesday, showcasing the growing symbiosis between fintech and traditional banking.
Slice, which is headquartered in Bengaluru and has an NBFC licence, has officially received approval from the Reserve Bank of India (RBI) for this fusion. The merger promises to amplify their shared vision, aiming to reach a wider audience that currently remains untouched by basic banking facilities, according to an official statement by Slice.
It’s reminiscent of the 2021 scenario when the RBI granted fintech firm BharatPe permission to acquire a significant stake in Unity Small Finance Bank, a move aimed at rescuing the Punjab and Maharashtra Cooperative (PMC) Bank.
Post this merger, the standalone entity of Slice will no longer operate. An informed insider revealed, “All components of Slice, its NBFC licence included, will converge into the unified banking entity.” The same source underscored Slice’s rigorous preparation for this union, spanning over 15 months of audits, due diligence, and collaboration with NESFB to better assimilate banking operations.
In an initial gesture of commitment, Slice had previously acquired a 5% stake in North East SFB, which was later amplified by another 5% this year. Though exact financial details remain under wraps, preliminary estimates peg Slice’s market valuation at about ₹11,700 crore and NESFB’s at over ₹450 crore.
The merger, which awaits further regulatory nods, aims to coalesce the digital prowess of Slice with NESFB’s entrenched banking foundation, potentially reshaping the landscape of banking services.
While post-merger intricacies like leadership distribution and possible rebranding are still on the discussion table, the merger resonates with optimism, especially in light of challenges faced by NESFB recently, such as the Assam floods.
Supported by heavyweight backers, including Tiger Global and Blume Ventures, and valued at roughly $1.5 billion from its last funding round, Slice’s employee base of about 1,300 stands at a crossroads, with their post-merger status still uncertain.
Slice’s CEO, Rajan Bajaj, expressed his vision for the merger, emphasizing a future driven by technology, data, and an unwavering focus on customer needs. As both entities inch closer to integration, customers are assured a smooth and enhanced banking experience.
In a significant pivot from its earlier strategy, Slice, which once extended credit through prepaid cards primarily to a younger demographic, adapted its offerings following an RBI intervention.
The merged establishment anticipates a robust capital adequacy ratio of 35-40%, comfortably surpassing RBI guidelines, setting a promising tone for the future.
