Slice, now a regulated bank after its 2024 merger with North East Small Finance Bank, is undergoing a significant strategic shift. The company is actively moving its lending portfolio away from predominantly unsecured loans towards secured lending. Rajan Bajaj, Managing Director and CEO, confirmed this pivot, stating that secured loans, currently making up about 22% of the total portfolio, are projected to become the majority segment within the next decade. This strategic change leverages Slice’s new banking license, fundamentally altering its operational model and growth trajectory.

What Happened?

Founded in 2016 by Rajan Bajaj as a consumer fintech startup, Slice initially built its business on offering unsecured consumer credit. However, a major transformation occurred in 2024 when it merged with North East Small Finance Bank, officially becoming a regulated bank. This merger opened new avenues for the company, particularly in asset-backed lending. At the time of the merger, secured lending constituted a mere 4% of the total loan book, primarily from the small finance bank's existing operations, with Slice itself having no secured portfolio.

Since becoming a bank, Slice has rapidly expanded its secured lending operations. The company is now actively pursuing segments like 'Loan Against Property,' embedded finance solutions, and secured loans to small merchants. Bajaj highlighted that the secured business is growing faster than unsecured lending and is expected to maintain this pace. The availability of a better cost of funds as a bank is a crucial enabler for building this secured lending portfolio more organically. In FY26, Slice's assets under management (AUM) surged by 78% year-on-year to ₹4,554 crore. Deposits also more than doubled, reaching ₹5,111 crore by the end of FY26 from ₹2,446 crore a year earlier, indicating strong customer trust and operational growth. The company has also turned profitable for the full year, reporting a net profit of ₹27.97 crore for the first nine months of FY26, a significant turnaround from a ₹217 crore loss in FY25.

Key Highlights

Slice transformed into a regulated bank in 2024 through a merger with North East Small Finance Bank.
The company is strategically shifting its focus from unsecured to predominantly secured lending.
Secured lending currently accounts for approximately 22% of Slice's loan portfolio, up from 4% at the time of merger.
Managing Director and CEO Rajan Bajaj expects secured lending to become the dominant segment within the next ten years.
Assets under Management (AUM) for Slice increased by 78% year-on-year to ₹4,554 crore in FY26.
Deposits more than doubled to ₹5,111 crore by the end of FY26, demonstrating significant growth.
Slice recorded a net profit of ₹27.97 crore in the first nine months of FY26, marking a significant financial turnaround.
New growth areas include Loan Against Property, embedded finance, and secured loans for small merchants.
The company is expanding its physical branch network to support the growth of its secured lending business.

Why Does This Matter?

This strategic pivot by Slice holds significant implications for both the company and the broader financial landscape in India. For Slice, transitioning to a secured lending model offers greater stability and reduces exposure to the higher risks often associated with unsecured personal loans. As regulators have shown increasing caution regarding unchecked growth in unsecured lending, a shift towards asset-backed loans positions Slice for more sustainable and responsible growth. This move allows the bank to tap into a wider, more stable customer base while leveraging its banking license for a more competitive cost of funds, directly benefiting its financial health and long-term viability. It also presents a more diversified product offering to consumers, potentially expanding access to credit for various needs, such as property-backed loans for larger financial requirements.

For common people and the Indian economy, Slice's strategy could mean a more stable and diverse lending environment. While unsecured digital lending saw a recent recovery, concerns about asset quality persist among credit agencies. Slice's move towards secured lending, despite its execution challenges like the need for physical infrastructure and branch networks, reflects a more cautious and fundamental approach to banking. This could lead to a more robust financial sector, where digital-first banks like Slice are building hybrid models that combine technological efficiency with the security of traditional banking. Ultimately, this strategic change could provide consumers with a broader array of loan products, while also contributing to the overall stability of the financial system in a rapidly evolving market.