Fintech startup OneStack has secured ₹12.5 crore in a fresh funding round. The new capital will help India's smaller cooperative banks upgrade their digital technology. New investor Shepherd’s Hill led this crucial round of financing.
Existing backers Pentathlon Ventures and AVNM Ventures also joined the raise. The funds will allow OneStack to offer direct UPI integrations and core banking tools to local banks. This latest injection brings their total capital raised to roughly ₹45 crore across four distinct funding rounds.
Key Highlights at a Glance
- Funding Raised: ₹12.5 crore in a fresh round led by Shepherd’s Hill.
- Total Capital: Approximately ₹45 crore raised across four rounds since inception.
- Strategic Shift: Partner cooperative banks can now issue UPI IDs directly under their own names.
Amit Kapoor founded the company in 2019. He previously co-founded the payment gateway Airpay. His primary goal is to help local, rural banks compete with giant commercial lenders in a fast-paced digital age.
Cooperative banks serve millions of rural and urban customers daily. Yet, they often lack the massive budgets needed to build modern mobile apps. OneStack bridges this technology gap by providing ready-made, cloud-based software platforms.
The fresh capital will fuel expansion in three core areas. First, it will deepen the startup's reach among district cooperative banks. Second, it will push their technology into the NBFC sector. Finally, it will fund the creation of new regulatory compliance tools.
In March 2025, OneStack successfully closed a $2 million Series A funding round. That specific round was led by Pentathlon Ventures, proving their long-term belief in the company. Other prominent investors like 100Unicorns and Venture Catalysts also backed the firm.
The company’s wider investor ecosystem includes big names like 9Unicorns, growX Ventures, Stride Ventures, and Samved VC. This broad backing highlights the rising institutional interest in B2B financial infrastructure over pure consumer apps.
The Numbers Behind the Move: A ₹11.3 Lakh Crore Market
India’s cooperative banking network is truly massive. These institutions fund local farmers, small village shops, and regional supply businesses. They handle a huge chunk of the nation's grassroots credit and cash flow.
According to official government data from the PIB, cooperative banks held an outstanding loan book of over ₹11.33 lakh crore as of March 2025. This network includes urban, state, and district central cooperative banks.
| Cooperative Bank Category | Number of Banks | Outstanding Loans (March 2025) |
|---|---|---|
| Urban Cooperative Banks (UCBs) | 1,457 | ₹3,68,574 crore |
| State Cooperative Banks (StCBs) | 34 | ₹3,19,085 crore |
| District Central Coop Banks (DCCBs) | 351 | ₹4,44,806 crore |
Despite holding such massive wealth, these local banks struggle with basic digital tasks. Upgrading legacy software costs time and millions of rupees. Many rural branches simply cannot afford to hire an independent IT team.
This is exactly where OneStack steps in with a clear solution. According to reports by The Economic Times, the startup claims to actively serve more than 200 banks across the country. It gives them enterprise-grade cloud tools for a fraction of the traditional cost.
These banks are vital for deep financial inclusion in India. While big city banks focus on corporate loans, cooperative banks understand local community needs. Empowering them with modern tech keeps local economies thriving.
Regulatory & Operational Mechanics: Taking Back UPI
For years, cooperative banks relied heavily on larger commercial banks to offer digital payments. They acted through these "sponsor banks" just to issue basic UPI IDs. This meant they lost total control of their own customer data.
OneStack changes this outdated model entirely. Its software allows partner banks to connect directly to the National Payments Corporation of India (NPCI). Now, they can issue UPI IDs under their own distinct bank names.
They can also act as direct merchant acquirers. This means a local district bank can onboard a neighborhood grocery store to accept QR code payments. The bank manages the entire digital process from start to finish.
An issuing bank holds the consumer's money, while an acquiring bank holds the merchant's money. Historically, small banks could only issue. Now, they can acquire. This is a game-changing power shift in digital finance.
By owning both sides of the transaction, local banks keep their customers close. They do not have to share the relationship with third-party payment apps or large, aggressive commercial sponsors.
"Enabling cooperative banks to own both sides of a UPI transaction places them closer to the resulting payment relationships and revenue flows." — Amit Kapoor, Founder, OneStack
Another critical factor is the upcoming Merchant Discount Rate (MDR) rule. The government recently proposed a 0.40% MDR on specific UPI merchant transactions that exceed ₹2,000.
While this rule was officially deferred by the NPCI until after Diwali, it represents a massive future opportunity. If local banks directly acquire merchants, they could earn a share of these payment processing fees.
This potential revenue stream makes technology upgrades highly attractive. It shifts digital payments from being a pure cost center to a future profit driver for small banks.
The News4Bharat Perspective: Power Shifts to Local Banks
India's digital payment boom has largely favored top-tier private and public sector banks. As seen with giants like SBI, massive scale allows for rapid tech deployment. Local cooperative banks were largely left behind.
OneStack’s latest funding strongly signals a shift in the market. Investors now see clear value in empowering grassroots financial institutions. A healthy cooperative sector ensures that rural India is not excluded from the digital economy.
The startup recently partnered with a major private bank that officially sponsors over 250 cooperative banks. This alliance gives OneStack a powerful distribution channel to scale its software quickly across the nation.
Furthermore, the company is listed as a technology provider on Sahakar Sarathi. This is a shared-services initiative promoted by NABARD and the National Cooperative Development Corporation (NCDC) to boost rural banking tech.
OneStack does not just offer basic UPI. It builds white-labeled mobile banking applications. This means a rural bank can launch a slick smartphone app that carries its own logo and colors, building local brand trust.
To support local shops, OneStack also deploys the Merchant SoundBox. This audio device instantly reads out transaction confirmations in local languages. It builds vital trust among shopkeepers who may not want to check their phones constantly.
The real winners here are local consumers and small-town merchants. They can now enjoy fast, modern mobile banking without leaving their trusted neighborhood banks. The local money stays local.
What to Watch Next: NBFC Expansion and Tight Compliance
Beyond traditional banks, OneStack is aggressively expanding into the Non-Banking Financial Company (NBFC) sector. These independent lenders need robust tools for rapid customer verification and strict fraud prevention.
The startup has integrated crucial compliance features into its core platform. This includes Aadhaar Offline Verification tools and direct reporting ties to the Indian Cyber Crime Coordination Centre (I4C).
Regulatory compliance is currently a top priority across the entire financial sector. With the RBI enforcing much stricter cyber rules, smaller lenders simply cannot afford expensive compliance failures.
OneStack's ability to offer "compliance-as-a-service" could become its biggest growth engine. It saves small NBFCs from hiring costly legal and technical teams just to build secure customer onboarding flows.
The company also holds RuPay debit card issuance certifications. This allows their client banks to easily issue branded debit cards, adding another vital service to their digital banking portfolios.
In the coming months, the industry will watch closely for the official new UPI MDR rollout date. If this fee structure goes live soon, OneStack’s direct merchant acquiring tools will see a huge spike in demand.
Until then, the new ₹12.5 crore capital gives the company ample financial runway. It can refine its OneCBS platform and push much deeper into India’s vast, largely untapped cooperative banking heartland.
Frequently Asked Questions (FAQs)
Quick answers regarding OneStack's recent funding and its role in modernising cooperative banking.
How much funding did OneStack raise?
OneStack raised ₹12.5 crore in a fresh funding round led by Shepherd’s Hill, taking its total cumulative capital raised to approximately ₹45 crore across four rounds.
What does OneStack actually do?
OneStack builds technology infrastructure that allows cooperative banks and NBFCs to offer digital banking, issue UPI IDs, and process merchant payments without building their own software.
Why is direct UPI issuing important for these banks?
Direct issuing allows local cooperative banks to connect straight to the NPCI network, keeping full control of customer data rather than relying on larger intermediary sponsor banks.
Who invested in this OneStack funding round?
The ₹12.5 crore round was led by new investor Shepherd’s Hill, with continued participation from existing backers Pentathlon Ventures and AVNM Ventures.
What is merchant acquiring in UPI?
Merchant acquiring means a bank directly onboards a shopkeeper to accept QR code payments. The bank manages the merchant's account and settlement, opening up new potential revenue streams.
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