India’s answer to global digital banks such as Revolut and Nubank will be built within a licensed bank, rather than a fintech distributing other lenders’ products, according to Rajan Bajaj, managing director and chief executive of Slice Small Finance Bank Ltd.
“The fintech distribution model will not be the answer to a Nubank or a Revolut in India. The answer to that will be through a bank licence, not a fintech,” Bajaj said in an interview with Mint. His consumer-lending startup became a bank after merging with North East Small Finance Bank in October 2024.
Slice wants to become customers’ main bank for payments, savings and borrowing. Bajaj’s bet is that technology-led customer acquisition, servicing and credit assessment, alongside selling more products to existing users, will lower costs and increase revenue per customer, creating room for better rates and rewards.
“We are competing against inefficiency,” Bajaj said. He pointed to the high costs of running branches, acquiring and serving customers, and weaknesses in assessing borrowers’ ability to repay loans.
Central to that pitch is control over technology. Bajaj said Slice spent three years developing its core system, allowing faster product changes and reducing dependence on vendors. It has also built its video know-your-customer system in-house, using artificial intelligence (AI) agents to flag potential mule-account applications, and now opens about 500,000 accounts a month, he said.
Slice will retain a physical presence where customers need it while avoiding unnecessary branch costs elsewhere, he added.
Building the deposit base
Deposits, central to Slice’s transition from a credit to a bank, more than doubled to ₹5,132.6 crore at the end of March 2026 from ₹2,418.4 crore a year ago. Borrowings declined to ₹822 crore at the end of March 2026 from ₹1,139.5 crore a year ago.
Savings deposits nearly quadrupled to ₹1,871.5 crore during fiscal year 2025-26 (FY26). Current and savings accounts, or Casa, accounted for 39.9% of total deposits at the end of March.
Slice offers interest on savings accounts at 5.5% a year, matching the Reserve Bank of India’s (RBI) current repo rate, and credits it daily. The offering is part of its strategy to attract customers and build a retail deposit base.
Contrasting Slice’s offering with those of other banks, Bajaj said some advertise high savings rates that do not apply to the customer’s entire balance. A bank advertising 7%, for instance, may pay only 2.5% on the first ₹5 lakh and the higher rate only on money above that threshold. Someone keeping ₹6 lakh would earn the advertised rate on just ₹1 lakh, he explained.
Slice now uses customer deposits to fund loans, reducing its reliance on borrowings. But its cost of deposits—the interest expense as a share of average deposits—was almost unchanged at 7.12% in FY26.
Asked why deposit costs had not fallen despite growth in Casa, Bajaj cited expensive debt inherited from Slice’s former lending business following its merger with North East Small Finance Bank. “That also increased the cost a bit,” he said. He added that deposit costs were now lower but declined to share exact figures.
Banking small businesses
Slice’s business app, launched in November 2025, offers merchants current accounts, QR codes, soundboxes and collateral-free loans of up to ₹10 lakh. Merchants processed ₹6,000 crore in payments between launch and March 2026, while monthly merchant-loan disbursements reached ₹162 crore in March, according to its annual report.
Bajaj said businesses often choose the nearest branch rather than a bank offering better services or lower fees, reflecting limited competition compared with consumer banking. Slice aims to bring merchants onto its payments platform and current accounts, then use transaction records and available goods and services tax data to assess creditworthiness and offer loans.
Beyond lending and payments, Slice is looking to offer and distribute insurance to expand fee income. Non-interest income already accounts for about 42% of its income, Bajaj said, without specifying the period.
“As we do more fee-based products, we’ll do more consumer-first products,” he said, adding that these offerings would extend to businesses over time.
In the June quarter of FY27, Slice’s interest income rose to ₹291.5 crore from ₹275.4 crore in the preceding March quarter. Other income, which includes fees, commissions and recoveries from written-off loans, slipped to ₹122.3 crore from ₹124.3 crore, indicating that the sequential revenue growth came from interest earnings rather than non-interest income.
Testing the economics
Slice reported a net profit of ₹48.4 crore in FY26, against a loss of ₹216.7 crore a year ago. Total income rose to ₹1,402.7 crore from ₹603.8 crore. However, FY26 includes a full year of the merged businesses’ operations, while FY25 includes them only from 27 October 2024, making the comparison uneven.
Bajaj said upfront technology spending should allow Slice to serve more customers without costs rising as quickly. “We think the operating leverage will keep kicking in as we keep delivering from here on,” he said. Profitability also reassures customers about the bank’s stability, he added.
Net profit more than doubled to ₹50.9 crore in the June quarter of FY27 from ₹20.4 crore in the March quarter of FY26, as operating expenses fell to ₹226.1 crore from ₹249.1 crore.
Containing bad loans as lending expands remains another challenge. The gross non-performing asset (GNPA) ratio fell to 4.4% at the end of the June quarter of FY27 from 4.8% in the preceding March quarter, but gross bad loans rose to ₹222.5 crore from ₹217.8 crore.
In FY26, Slice technically wrote off ₹104.9 crore of bad loans and recovered ₹33.3 crore from previously written-off accounts.
Slice is also preparing for an initial public offering by 2028, Bajaj confirmed, saying it remains on track. His longer-term ambition is to become customers’ main bank. “We want to be the primary account for the entire 100%,” he said.