Fintech credit and payments start-up slice and Guwahati-based North East Small Finance Bank (NESFB) have announced a merger between the two entities.

The banking regulator, the Reserve Bank of India has approved the deal and will see slice becoming an SFB, a first-of-its-kind development in the fintech and banking space.

Bengaluru-based slice was last valued at around $1.8 billion during its previous fundraising last year, according to a data intelligence platform Traxcn. It had raised $50 million in Series C from Tiger Global and others, including Moore Strategic Ventures, Insight Partners, and GMO VenturePartners.

While the details of the shareholding of the merged entity is not known, this could mean that slice shareholders will likely own a majority stake in the merged entity. This is possibly the first, if not, a rare instance of a new-age fintech start-up merging with a small finance bank.

In March 2023, slice announced acquiring a 5 per cent stake in NESFB for a value of $3.4 million.

Technological integration

The fintech unicorn said that the merger will help realise the merged entity’s shared goal of integrating technology with grassroots financial inclusion across the nation. This merger is yet to get the requisite shareholders’ consent and other regulatory approvals.

“We’re grateful to the RBI for entrusting us with this immense responsibility. This approach allows us to serve a wider audience, including those often overlooked. We will further strengthen our risk underwriting through the use of technology and data. We see this as an opportunity to build a highly inclusive and responsible bank, underpinned by robust risk management and strong governance,” said Rajan Bajaj, founder and CEO, slice.

The companies will decide on the management positions and other strategic changes in the coming few months. “There will be an integration process with both entities working diligently to ensure a smooth transition for all customers,” the companies said in a joint statement.

“This alliance with slice marks an exciting expansion of our reach and enhancement of our services. Dedicated to supporting the underserved, our collaboration is bolstered by slice’s innovative technology and a keen emphasis on customer experience,” said Rupali Kalita, Managing Director and CEO of NESFB.

Earlier, the core business model of slice was to issue prepaid cards in partnership with SBM Bank with a relatively low credit limit targeting young customers. However, the RBI’s new guidelines stopped the company from issuing a credit line on a prepaid card last year. It was issuing prepaid cards. It has up-ended the businesses of several start-ups that were issuing such cards such as Uni, Jupiter, Fi Neobank and a few others.