Slice Announced its Merger with North East Small Finance Bank Limited (NESFB)

What Led to This?

CRISIL downgraded NESFB’s credit rating from BBB- to BB+ on 17th Nov 2022 as the bank breached the minimum CAR requirement.

What is CAR?

The capital adequacy ratio (CAR) indicates the bank’s capital in relation to its current liabilities and risk-weighted assets.

CAR Impact

CAR ensures banks hold capital reserves to absorb potential losses without insolvency. NESFB’s CAR was 11.26% as of 30 June 2022, against the minimum requirement of 15%.

SFB Financials

This was due to SFB’s sharp rise in the GNPA from 28.4% on June 22 to 10.90% in March'22, along with a Rs. 128 Cr loss in Q1 FY23.

Talks of Merger

The merger has been discussed since January 2023 when Slice onboarded Mr Eugene Emmanuel Karthak, Executive Director at RBI, as a board member.

Slice’s Stake in NESFB

Slice also acquired a 5% stake in the bank for about $3.42 M in March 2023.

Impact of the Merger

The merger is a significant move in the fintech industry after a positive signal from the RBI to revive the financially deteriorating bank.

Shareholding Pattern

The shareholding details are not known yet, but it is expected that Slice will own a majority stake in the combined entity.