Slice has acquired a 5% stake in Indian bank North East Small Finance in what analysts see as a key step in the unicorn fintech startup’s journey amid growing central bank challenges that have toppled many start-ups .

The Bengaluru-based startup invested $3.42 million for the 5% stake in the small Guwahati-based financial bank in September, according to a regulatory filing.

The investment comes at a time when the Reserve Bank of India has clipped the wings of many fintech startups operating in the card and loan categories by demanding strict adherence to tough new guidelines.

It’s unclear how a stake in a bank, admittedly a rare and seemingly big step for a startup, would immediately benefit Slice, a $1.55 billion startup that includes Tiger Global, Insight Partners, Blume Ventures and Axis Bank. among its donors.

The company did not respond to a request for comment.

The world’s second most populous nation is going through an interesting phase as banks and fintech startups explore ways to improve their engagements. Federal Bank and SBM Bank India have courted many startups as clients in recent years as they try to boost their businesses.

Slowly larger banks, including HDFC and ICICI, have also expanded their deliberations with younger firms. HDFC, India’s largest private bank, recently backed Mintoak, a SaaS platform that provides merchant services in India and other markets.

The Indian branch of SBM Bank began engaging with investors to raise capital late last year, laying out the vision to become one of the country’s leading banking-as-a-service providers, reported TechCrunch earlier. Accel and Quona backed Shivalik Small Finance Bank last year.

But an increase in the proliferation of some China-linked predatory lending apps in the South Asian market in recent years has forced the hands of the central bank to introduce rules that have a huge impact on many businesses, including those who are not involved in bad business. faith-based business practices.

Incorporated in 2016, North East Small Finance Bank is a subsidiary of RGVN (NE) Microfinance which serves clients in the North East region of the country. It counts Pi Ventures, SIDBI Venture Capital and Bajaj Group among its backers.