On 6 April, the Reserve Bank of India (RBI) expanded the reach of the unified payments interface (UPI), potentially opening doors for lending fintechs such as Slice to introduce new credit products on the payments platform. The initial euphoria, however, was short-lived. The central bank’s governor Shaktikanta Das delivered a caveat: banks must be involved in the process.
RBI’s announcement meant people with pre-sanctioned credit lines at banks could now use UPI to make payments. For Slice, it meant complying with a set of guidelines that are not favourable to its business model.
Like on that day, Slice—the Bengaluru-based fintech unicorn—has often found itself in a precarious situation: caught between a rock of strict regulations and a hard place of working with banks.
Many believe Slice’s struggles started on 20 June 2022. RBI had decided to ban credit lines on prepaid payment instruments (PPIs), or in simpler terms, digital wallets.
While this ban may have been a tipping point, the wheels of misfortune started churning much earlier—precisely in 2021.
Back then, Slice started positioning itself as a “ credit-card challenger credit-card challenger The Ken Lending is easy for Slice, making money isn’t Read more ”, boasting monthly card-disbursal figures that could give even India’s biggest banks a run for their money. The move didn’t escape the attention of top bankers, who escalated the issue to RBI, triggering a chain of events.
Until the ban last year, Slice was disbursing over 300,000 credit-line-backed PPI cards monthly, compared to the 200,000 issued by some top banks, said an ex-employee of Slice. Former and current employees of Slice and other fintechs declined to be named due to concerns related to publicly speaking about the company.
“Had RBI not intervened, Slice could have touched SBI’s [India’s largest state-run lender State Bank of India] numbers within 2-3 years,” the ex-employee added. SBI Cards and Payments Services—the lender’s credit-card arm—had 16.8 million credit cards in use, second only to HDFC Bank, as of March 2023.
RBI’s ban, then, served a swift stroke that broke the cornerstone of Slice’s primary business model, along with other lending fintechs such as Uni Cards, LazyPay, and KreditBee.
Two months later, the regulator instituted the digital lending guidelines (DLG), which placed even more constraints on fintechs seeking partnerships with banks. These included cutting off access to key user data and giving more bargaining power to banks.
