Jupiter in talks to acquire 5-9.9% stake in SBM Bank India for an undisclosed amount
The deal is yet to be finalised and both parties will also need RBI approval for the transaction to be finalised.
This comes at a time when several Indian fintech startups are rushing to invest in banks after the RBI imposed restrictions on licensing conditions in case of non-compliance.
Neobanking startup Jupiter, which counts Tiger Global, Peak XV and Matrix Partners among its backers, is the latest in a string of fintech startups to weigh an investment in a bank.
The Bengaluru-based startup is in preliminary discussions to acquire a 5-9.9% stake in SBM Bank India, a subsidiary of State Bank of Mauritius, for an undisclosed amount, TechCrunch reported, citing sources.
Jupiter
Founder and CEO Jitendra Gupta declined to answer questions from Inc42, saying he does not “comment on market rumors.”
It is worth noting that the deal with SBM Bank India is yet to be sealed and both parties will also need to get approval from the Reserve Bank of India for the transaction to be finalised.
Founded in 2019 by serial entrepreneur Jitendra Gupta, Jupiter offers a range of financial services including debit cards, SIPs, mutual funds, personalized savings options, expense management and UPI payments.
In June, the startup obtained a prepaid payment instrument license from the RBI to provide digital wallets for UPI payments, money transfers and bill payments.
The development comes at a time when several Indian fintech startups, as well as venture capital and private equity firms, are rushing to invest in banks after the RBI imposed restrictions on licensing conditions in case of non-compliance.
Last year, reports surfaced that investtech unicorn Zerodha, private equity firm Multiples and Premji Invest were in talks to acquire a stake in Nainital Banka subsidiary of Bank of Baroda.
Lightspeed India Venture Partners and Elevation Capital are also reportedly evaluating an investment in Shivalik Small Finance Bank.
These companies are rushing to tie up with lenders as banking licenses are still scarce in the country. Only three Indian fintech startups — Paytm, BharatPe and slice — have banking licenses.
While there are still differing opinions on the usefulness of a banking license for fintech startups, it could help them reduce their acquisition costs. However, India’s banking regulator has stepped up its crackdown on the fintech sector, even for minor licenses such as NBFCs and peer-to-peer lending services.
The RBI’s scrutiny stems from its findings that several fintech companies were lax in following customer due diligence rules. The industry got a rude awakening in January when the regulator ordered Paytm to shut down its banking division. A month later, the RBI also ordered Visa to stop all B2B card payments through third-party fintech companies.