Slice merges with North East Small Finance Bank

It helps them achieve a lot. They can take deposits, extend loans, issue cards without needing a partner and maybe start mutual funds and insurance businesses. Huge W for Slice.

Cost of capital for an NBFC is pretty high compared to the SFB/CB. NBFCs are restricted on many fronts - customer profiles, ticket sizes and product portfolios.

With SFB license and money in bank (they raised 220m$), they can offer more products. Though the history says something else, BharatPe did the same with other bank couple of years ago but the value creation is not visible on ground.

The hypocrisy of these FinTech/NeoBanks is also exposed, where they used to curse traditional banking models 🤪

Kids take funding from Angels
Men take funding from VCs Legends merge with banks

Every Fintech wants to become bank and every bank wants to become fintech

Cost of capital is like “raw material” for a lending institution. Costlier the raw material, squeeze on the margins.

CoC for Banks - 4 to 6 % CoC for NBFCs - 10 to 12%

Maybe they will apply for a banking licence

I think they are creating just another neo banking app now like Fi and jupiter.
I upgraded to the new update and now they gave me a debit card along with upi linked with slice bank account.

Originally SLICE started as an NBFC with BUY NOW PAY LATER as its core offering. The proposition was simple , you buy now and pay on due date (something which credit cards do). However in order to make the product more exciting they started offering that you can pay 1/3 now , 1/3 on one month later & remaining 1/3 2 months later. This gap was financed by state Bank of Mauritius as their banking partner by offering unsecured credit loan to the card holder. If they were unable to pay even after such period , card holdes could pay loan processing fees and interest [high rates] to convert these amounts into emi. Thus this is how they originally planned to make money.

But RBI realized this increases RISK AT SYSTEMATIC LEVEL plus destroys borrower behaviors hence RBI issued guidelines and make it illegal to offer such products.

Now these companies like Slice , postpe & uni etc had their business models broken and tried to move into things like unsecured loans & UPI companies (like paytm) but failed. So they have realized the only way they can survive is by merging with banks who currently do not have credit card services or have low coverage for their credit cards. So this is basically a move to become credit card service providers on behalf of banks & become their product managers (sort off, because banks will eventually determine fees etc. )

This also decreases systematic risk as the credit default gets trfrd on balance sheets of banks which are continuously monitored by RBI. Blow offs will still happen but will not impact overall environment.

The Indian regulation doesn't allow any entity to be an NBFC after 5 years of the license. They have to do such mergers.

Hopefully RBI will spare them a bit now and throw them a bone