In a strategic initiative that could shake up India’s financial sector, neobanking startup Jupiter is in discussions to acquire a 5% to 9.9% stake in SBM Bank India, the Indian subsidiary of the State Bank of Mauritius. Backed by well-known investors such as Tiger Global and NuBank, Jupiter is looking to expand its presence in the banking industry through this acquisition, though the deal is still pending approval from the Reserve Bank of India (RBI).
This move is part of a growing trend among fintech companies that are forming partnerships with traditional banks to enhance their offerings and reach a wider audience. The collaboration could allow Jupiter to leverage SBM Bank’s established infrastructure, further modernising financial services for Indian consumers.
Why This Deal is Important for Jupiter
Founded by Jitendra Gupta, Jupiter has quickly made a name for itself in India’s fintech space. The company offers a range of digital banking services, including UPI payments, mutual funds, customised savings accounts, and debit cards. Recently, Jupiter obtained an RBI licence to operate as a prepaid payments instrument (PPI), allowing it to offer digital wallets for bill payments, money transfers, and more.
A stake in SBM Bank would significantly strengthen Jupiter’s position in the industry. By partnering with a traditional banking institution, Jupiter could provide more comprehensive financial services, enabling it to compete with both fintech rivals and established banks. This could be a game-changer in terms of expanding its customer base, especially in a market where non banks have yet to gain the widespread popularity seen in countries like Brazil.
Jupiter’s Financial Performance
Despite its growing reputation, Jupiter is facing financial challenges. In the fiscal year 2022-23, the company reported revenues of ₹55.98 crore, with operating income increasing more than 2.5 times to ₹48.86 crore. However, losses also surged to ₹327 crore during the same period. These financial setbacks haven’t deterred investors, as Jupiter successfully raised $165 million in funding in 2023, pushing its valuation to $654 million.
A Growing Trend in Fintech-Bank Collaborations
Jupiter’s move mirrors a broader trend in the fintech sector, where companies are increasingly collaborating with traditional banks to diversify their offerings. Last year, Slice, another fintech startup, received RBI approval to merge with North East Small Finance Bank, enabling it to serve a broader customer base. Similarly, major venture capital firms such as Lightspeed and Accel have invested in small finance banks, indicating a growing interest in fintech-bank partnerships.
As the lines between fintech and traditional banking continue to blur, collaborations like the one between Jupiter and SBM Bank could redefine how consumers access financial services in India.
What’s your take on this? Will this move benefit both companies or face regulatory challenges? Let us know in the comments below!