Remember how Slice was a lifesaver, especially in college days? It offered small loans and easy EMIs when no one else did.

However, some people had bad experiences with Slice’s aggressive collection tactics, higher interests, or even showing up at borrowers’ homes for repayments, making them rethink using Slice again.

And if you recall, RBI’s new guidelines last year stopped Slice from issuing credit on prepaid cards, affecting other similar startups like Uni, Jupiter, Fi Neobank etc.

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But now, things are changing!

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Last week, RBI approved the merger of Slice with North East Small Finance Bank. This first merger is a hope for many FinTech companies that are looking for a better landing.

Before this, back in 2021, RBI allowed BharatPe to buy a 49% stake in Unity Small Finance Bank to rescue PMC Bank.

How Slice Became the Chosen One?

In September 2022, Slice announced plans to buy a 5% stake in North East SFB for $3.42 million. In March, the deal went ahead with Slice as no other buyers stepped up.

Without this rescue, North East SFB was at risk of collapsing financially, which could have had serious consequences for the entire system. This is why the banking regulator, the RBI, approved the Slice transaction.

Let’s explore more about Slice and North East SFB!

Slice is already a unicorn and has over 1.2 crore customers, employing around 1,300 people, whereas North East SFB has around 5 lakh customers.

Slice started in 2016 and focuses on payment and credit space, while North East SFB received an SFB licence from RBI in 2015 and began operations in 2017, with 208 branches across seven North East states and West Bengal.

How will this merger benefit both Slice and North East SFB?

For Slice, becoming either a bank or NBFC is the only ideal solution. 

So, the biggest benefit for Slice is that it will now become a regulated entity, earning respect from the market since it will be monitored by the central bank.

As for the North East Bank, they will gain the advanced technology of Slice and access to new markets. Currently, the bank mainly operates in the northeastern region, and despite being around for 6 years, it hasn’t grown much or achieved scale.

With the merger, Slice brings technology, and the bank brings its customer base and network, creating a mutually beneficial situation for both of them.

So, what happens next?

Both Slice and North East SFB offer different products and serve different customer bases, so working as a single system won’t be easy and will take time.

Now, there can be two possibilities: 

First, if both of them successfully overcome their problems and sustain themselves, the RBI will get a lot of credit, and we might see more fintech companies aiming for a bank licence.

Second, if things don’t go well, RBI can use this situation as a lesson and deny banking licences to other fintech in the future.

For many fintechs, Slice’s journey is now a beacon of hope.

Have you ever used any services of Slice? 

What are your thoughts on the future of other FinTechs? Do you think the government’s decision for this merger is a good step?

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