People familiar with the matter said the company’s funding round, of which $50 million was raised last month led by Tiger Global, is now on hold as stakeholders wait for clarity. Fintechs who are confused after following RBI circular Have written to the central bank for more details about its action.
Slice wanted to add at least $50 million to its latest round and was in talks with new and existing investors. After raising $220 million in a round led by Tiger Global and Insight Partners, the Bengaluru-based firm entered India’s long list of unicorns or startups with a valuation of over $1 billion in November last year. It was valued at about $1.5 billion in June after funding of $50 million.
While the company has substantial capital from its previous funding round, according to people briefed on the matter to investors, credit cards like Slice, Uni and others want to get a clearer picture for the challenging startup.
These startups, through industry associations, have initiated talks with the central bank, proposing measures to address the concerns.
Meanwhile, Slice continues to issue new prepaid payment cards, but only after conducting a thorough Know Your Customer (KYC) process, even though it has slowed down new issuances due to regulatory uncertainty. A person with information on this matter said.
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“We are extremely well capitalized and have the full support of our investors. We have full confidence in the regulator and are committed to complying with the expanded regulations while maintaining the highest standards of governance.” Rajan BajajSlice founder and CEO said in a statement to ET.
Bajaj wrote to its employees earlier this month, saying it is important for the company to understand the RBI’s objective, while scaling up operations and leveraging its technology stack.
regulatory uncertainty
RBI communication issued in June There was a major impact on fintechs, who were selling their credit-card proposition as a strong margin for their investors and stakeholders. “It will now be very difficult for these card-based fintechs to raise internally until the final regulatory landscape is clear. They were able to raise funds until they found themselves a challenger card to legacy credit cards.” Were saying – that was the pitch. Now the banks and RBI are angry and apparently the investors of these companies are examining the way forward with the founders.
With a slowdown in overall funding due to global macro headwinds, coupled with RBI’s tough stance on credit lines being loaded on PPIs, these startups face a double whammy.
Earlier this month, Swedish buy-now pay-later giant Klarna saw its valuation drop nearly 85% after it raised $800 million in new financing, as global macros continued to impact new-age technology companies. placed, in the midst of a massive reform.
Furthermore, fundraising will also be difficult for Slice’s competitor Uni in the current environment. “It’s going to be tough for these card-based fintechs because they can’t raise money until the final (digital lending) guidelines come out,” said one founder, who was aware of these firms’ fundraising discussions.
ET has been reporting over the past weeks that many of these
Affected fintechs in touch with RBI To bring more clarity in the matter.
One of the fintech founders affected by the RBI directive said, “One thing we are still understanding is whether only credit lines are banned and PPIs can still be loaded with one-time term loans. could.”
Credit-card license?
According to sources with insider knowledge, Slice is also looking to apply for a credit card licence. However, the plans are yet to be finalised.
And there are only two entities whose Non-Banking Finance Company (NBFC) units have obtained credit card license from RBI in the past. Slice is one of the few players in the card-fintech space to have an NBFC license, giving it an edge over the competitors in the segment.
However, the RBI continues to be wary of granting credit card licenses to non-banks.