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Fintech startup Slice recieves the go-ahead from RBI to merge with North East Finance Bank

Slice becomes the first fintech company to receive RBI’s nod for a small bank.

On October 4, the fintech startup Slice announced that it has received approval from the Reserve Bank of India (RBI) to merge with the North East Small Finance Bank, as reported by TechCrunch. The company stated that this merger will help it reach more customers who lack access to basic banking services. 

This decision comes after Slice ceased issuing credit cards in October 2022 to comply with RBI’s guidelines (which barred pre-payment instruments from offering customers a credit line) for digital lending platforms. Instead of issuing credit cards, it deposits any funds borrowed directly into the users’ bank account (eg. HDFC, ICICI, etc.). 

Why it matters:

This is the first time that a fintech company has been allowed to set up a small finance bank in India. Historically, RBI has not been in favour of fintech companies from setting up banks. In May 2022, the RBI rejected Flipkart co-founder Sachin Bansal-backed company Chaitanya India Fin Credit Private Limited and five others for setting up banks. It said that their applications were not found suitable. 

Similarly, in July this year, the authority rejected another three applications for setting up small finance banks. With all these applications being marked as “not suitable,” one is left to wonder, what did Slice do differently? 

What would this merger mean?

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