Fintech company Slice has halted its ongoing fundraising plans following RBI’s circular last month prohibiting Prepaid Payment Instruments (PPIs) from loading credit lines.
According to people familiar with the matter, the company’s investment round, which was headed by Tiger International and raised $50 Mn last month, is currently on pause while stakeholders await clarity.
Concerned about the RBI round, fintechs have written to the central bank, requesting additional details on its actions.
Slice was aiming to add at least another $50 Mn to its previous round and was in discussions with new and existing investors. Last year, the company joined India’s long list of unicorns, or companies worth more than $1 Bn, after receiving $220 Mn in a round led by Tiger International and Perception Companions. Following the $50 Mn financing in June, it was valued at approximately $1.5 Bn.
Given the fact that the company has sufficient capital from its last investment round, purchasers want to see a clear image of credit card-challenging companies like Slice, Uni, and others.
Through business associations, these startups have initiated discussions with the central bank, proposing measures to address the concerns.
Meanwhile, Slice continues to issue new prepaid payment cards, but only after completing a thorough know-your-customer (KYC) process, despite regulatory uncertainty.
“We’re very properly capitalised and have the total assistance of our buyers. Now we have full religion within the regulator and are dedicated to complying with increasing laws whereas upholding the very best requirements of governance,” Rajan Bajaj, Founder, and CEO of Slice, stated.
Bajaj wrote to his staff earlier this month, that it was vital for the company to comprehend the RBI’s goal while expanding operations and leveraging its technology stack.
The RBI’s statement in June had a substantial impact on fintechs, which had been advertising their credit-card service to buyers and stakeholders as a key differentiator.
“These card-based fintechs will discover it very powerful to now even increase internals, till the ultimate regulatory situation is evident. They had been capable of increasing funds till they had been calling themselves challengers playing cards to the legacy bank card – that was the pitch. Now banks and the RBI are irked and clearly buyers in these firms are continually checking on the way in which ahead with founders,” mentioned a fintech investor, who didn’t wish to be named.
With general funding stalling due to global macroeconomic issues and the RBI’s harsh stance on credit lines being stacked on PPIs, these enterprises are hit twice.
Earlier this month, Swedish buy-now-pay-later behemoth Klarna saw its valuation plummet by about 85 % when it raised $800 Mn in new investment, as global macroeconomic factors continue to weigh on new-age technology firms amid a wider correction.
Furthermore, fundraising for Slice’s competitor Uni may be effective in the current environment. “It will be difficult for these card-based fintechs since they won’t raise capital until the final (digital lending) guidelines come out,” stated a founder who was aware of those businesses’ fundraising conversations.
“One of many issues we’re nonetheless determining is whether or not solely credit score traces are banned and that PPIs can nonetheless be loaded with a one-time time period mortgage as an alternative,” stated a founding father of one of many fintechs impacted by the RBI instruction.
As reports suggest, Slice is thinking of seeking a bank card licence. Plans, however, have yet to be finalised. The only two companies whose non-banking finance company (NBFC) components have previously been given a bank card licence by the RBI are Slice and Bank of Baroda.
Slice is one of the few participants in the card-fintech industry with an NBFC licence, offering it a competitive advantage. Nonetheless, the RBI is leery of granting non-banks bank card licences.
Talking about the collaboration in Nepal, Shreya Agarwal, Lead Strategy and Operations of GreenZo Energy said, “Greenzo’s international experience in energy research, consulting and manufacturing produces synergy perfectly with API Power’s renewable energy assets. We are thus excited and looking forward to working on a common dream to decarbonise the planet”. The MoU will come into effect today and will remain active till the completion of the proposed projects by 2025.
Also Read | slice raises $220 million led by Tiger Global & Insight Partners
GreenZo Energy aims to provide integrated solutions for renewable energy projects in Asian countries. With 1500 MW of solar projects in its portfolio, the company now aims to play a crucial role in the world’s Green Hydrogen Initiatives.
Established on 19 June 2003, API Power Company Pvt. Ltd on the other hand, is one of the leading companies in Nepal’s power sector with power generation and supply to the national grid as its core business. The company, which is located in Kathmandu, is registered with the Securities Board of Nepal and the Shares of the Company ‘API’ are listed on Nepal Stock Exchange and are freely traded in the market.
