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Payment app Slice has invested $3.42 million to acquire a 5% equity stake in Guwahati-based North East Small Finance Bank, according to TechCrunch.

This is possibly the first, if not, a rare instance of a new-age fintech startup investing in a bank.  

It is immediately unclear as to what kind of partnership or opportunities Slice is wanting to pursue by investing in a small-sized bank. The startup may explore some synergies given that it runs a non-banking finance company, Quadrillion Finance, which was set up in 2018 to provide credit to the Indian youth. 

Slice had received an in-principle approval for a prepaid payment instrument (PPI) licence from the Reserve Bank of India (RBI), according to a report by The Economic Times in December.

The fintech unicorn, which entered the unicorn club with a $220-million Series B round co-led by Tiger Global and Insight Partners in November 2021, was one of the worst-hit when the RBI disallowed PPI instruments, including wallets and prepaid cards, to be loaded with credit lines.

Slice’s core business model was shaken given that it was almost solely reliant on prepaid cards targeting the young population. The fintech company halted its operation temporarily after the RBI guidelines came into effect in October last year. It was issuing prepaid cards in partnership with SBM Bank.

In June 2022, the company raised $50 million in Series C from Tiger Global and others, including Moore Strategic Ventures, Insight Partners, and GMO VenturePartners. According to a source, its valuation had increased from $1.5 billion to $1.8 billion with the fund infusion.

North East Small Finance Bank is a wholly-owned subsidiary of RGVN (North East) Microfinance Ltd, which aims to improve financial inclusion, specifically among women in the North Eastern region and North Bengal. It is backed by the likes of SIDBI Venture Capital Limited, early-stage fund Pi Focus, IDBI Bank, and Norwegian Microfinance Initiative.