In what is a first in India’s financial sector space, and could be a milestone decision, Slice, the Tiger Global-backed fintech unicorn, and North East Small Finance Bank (NESFB) have finally received green light from the Reserve Bank of India (RBI) for the upcoming merger between the two entities. RBI has given an NOC to the deal – something that will see Slice become an SFB in what is a groundbreaking development within the fintech and banking landscape. This translates to Slice now getting enabled to offer its financial services, mostly its loan platform, in a more legal, streamlined fashion.

Slice was last valued at approximately $1.8 billion during its previous fundraising round last year. During this round, Slice secured $50 million in Series C funding from prominent investors like Tiger Global, Moore Strategic Ventures, Insight Partners, and GMO Venture Partners. The credit and payments startup also acquired a stake of 5% in the Guwahati-headquartered North East Small Finance Bank (NESFB) for about $3.42 million back in March.

The details of the shareholding of the merged entity are yet to be shared, but we do know that decisions on the management positions (amongst other things) will be made in the coming months. The joint statement between the companies revealed that they intend to ensure an “integration process with both entities working diligently to ensure a smooth transition for all customers.”

The merger, a first of its kind in the country, could well result in several such proposals coming along RBI’s way, though the regulator will go with a cautious approach. In the past two years or so, several fintechs rose to prominence in India, with most of them offering quick, low-level credit to young, smartphone savvy Indian consumers. But RBI then issued guidelines, asking them to follow guidelines instated for credit card companies, since these fintechs were essentially issuing cards. In India, cards can only be issued by banks and bank-owned companies, which thus resulted in an almost standstill scenario for the likes of Slice, Jupiter, Navi among others.

This merger puts Slice right on top, well paving a way for it to become India’s first digital-first bank.

“We’re grateful to the RBI for entrusting us with this immense responsibility. This approach allows us to serve a wider audience, including those often overlooked. We will further strengthen our risk underwriting through the use of technology and data. We see this as an opportunity to build a highly inclusive and responsible bank, underpinned by robust risk management and strong governance,” said Rajan Bajaj, founder and CEO of Slice. This merger will be beneficial for Slice as well, which was barred from offering credit lines last year (thanks to a notification from the RBI).

It remains to be seen whether the merger results in increased financial accessibility, as well as a better digital banking experience to an expanded customer base. After all, by leveraging Slice’s digital capabilities and NESFB’s banking infrastructure, the merged entity will be able to reach underserved and unbanked populations. Together, they can leverage technology to reach remote and marginalized communities. After all, India still has a substantial population that remains unbanked or underbanked, and the merger’s emphasis on financial inclusion means that more people, particularly those in rural and remote regions, will have access to banking services.

This could include basic savings accounts, access to credit, and digital payment solutions, and the merger could help bridge the gap between urban and rural financial services, promoting economic growth in underserved areas. Furthermore, the customers of both Slice and NESFB are likely to benefit from an expanded suite of financial products and services, omnichannel offerings, and an improved overall experience.

“This alliance with slice marks an exciting expansion of our reach and enhancement of our services. Dedicated to supporting the underserved, our collaboration is bolstered by slice’s innovative technology and a keen emphasis on customer experience,” said Rupali Kalita, Managing Director and CEO of NESFB.