Guwahati: Slice, a payment app, has acquired a 5% equity stake in North East Small Finance Bank, based in Guwahati, for $3.42 million, according to a report by TechCrunch. This is a unique occurrence, as it may be the first time a modern fintech startup has invested in a bank.
The purpose of Slice’s investment and potential partnership with North East Small Finance Bank is currently unclear. However, as Slice operates Quadrillion Finance, a non-banking finance company that provides credit to Indian youth, there may be synergies to explore. In December, Slice reportedly received in-principle approval for a prepaid payment instrument license from the Reserve Bank of India.
Slice, a fintech unicorn that recently entered the unicorn club after a $220-million Series B round, was negatively impacted when the Reserve Bank of India (RBI) prohibited prepaid payment instrument (PPI) instruments, such as wallets and prepaid cards, from being loaded with credit lines. As a result, Slice’s business model, which primarily focused on prepaid cards for the youth market, was disrupted. The company temporarily halted operations after the RBI guidelines came into effect in October 2021. Slice had been issuing prepaid cards in partnership with SBM Bank.
Slice, the fintech unicorn, raised $50 million in its Series C funding round in June 2022 from investors including Tiger Global, Moore Strategic Ventures, Insight Partners, and GMO VenturePartners. The company’s valuation reportedly increased from $1.5 billion to $1.8 billion with the new funding.
North East Small Finance Bank, in which Slice recently acquired a 5% stake, is a wholly-owned subsidiary of RGVN (North East) Microfinance Ltd, backed by investors such as SIDBI Venture Capital Limited, Pi Focus, IDBI Bank, and Norwegian Microfinance Initiative. The move by Slice to invest in a small-sized bank is an uncommon one among new-age fintech startups, and the exact nature of the partnership or opportunities that Slice is looking to explore remains unclear.
