Many people in India lack access to banking, making it difficult for them to accumulate emergency savings and settle obligations. Low-income households and small businesses that ran out of credit completely over the past few months due to the pandemic are included in the underbanked segment. Then there are start-up companies and small and medium-sized firms (SMEs) that have solid business ideas but are experiencing a shortage of cash due to difficulties borrowing money.
A non-banking finance company in India called Northern Arc Capital (formerly known as IFMR Capital) gives underbanked people and companies access to debt.
Legal Name: Northern Arc Capital Limited
Headquarters: Chennai, Tamil Nadu, India
Business Model: B2C, B2B
Founding Date: 2008
No. of Employees: 151 to 250
1. Kshama Fernandes, Managing Director & Chief Executive Officer
2. Bama Balakrishnan, Chief Financial Officer
3. Amit Mandhanya, Head of Business
4. Salil Nair, Chief Technology & Information Officer
A platform that connects millions of borrowers with well-known debt investors has been developed by Northern Arc Capital through a combination of their resources, products, and partnerships. They underwrite the credits using a targeted strategy.
The Northern Arc’s journey has been incredibly interesting to see. This Chennai-based firm had its start in a tiny 10-person office at the IFMR Business School in Chennai in 2008. It placed its first microfinance securitization transaction with a bank investor in March 2019. It introduced MOSECTM, its first multi-originator securitization, in January 2010. It introduced the first ADB partial guarantee program of its sort in August 2012. By 2014, the company had raised its first ECB for microfinance, issued its first pool of bonds, and completed its first external equity round.
Their Vision is to be a trusted platform that enables the flow of finance from capital providers to users in a reliable and responsible manner. And its mission is to enable access to finance for the underbanked in an efficient, scalable, and reliable manner.
“Northern Arc plays a significant part in the formalization of informal finance for underbanked households and companies in India. Many of these are female borrowers and business owners. The team at Northern Arc, which is managed by women, firmly believes in diversity and the contribution women can make to improving society and the economy as a whole, according to MD & CEO Dr. Kshama Fernandes. The US DFC investment will enable Northern Arc to finance more of these qualified borrowers.
One of the biggest digital debt platforms in India, Northern Arc, revealed today that it has acquired debt financing worth $50 million from the US International Development Finance Corporation (DFC), one of the top impact investors in the world. The initial $25 million payment was made in December, and the last $25 million payment was made. This is a historic investment and one of the first significant facilities approved by international development financing organizations for the NBFC industry since the start of the Covid-19 pandemic. The money will be used to lend directly to retail clients through the co-lending product, as well as to mid-market corporations and financial institutions.
“Communities across the globe continue to face challenges in food security, sanitation, and financial inclusion – especially regarding rural and women-owned enterprises,” said Acting DFC Chief Executive Officer Dev Jagadesan. “DFC’s investment in Northern Arc represents an investment in women’s economic empowerment and sends a powerful message of U.S. support for gender equity this Women’s History Month.”
Over the past ten years, Northern Arc has played a significant role in enhancing financial inclusion in India and has taken the lead in meeting the credit needs of the country’s underbanked population. Financial institutions, mid-market companies, small firms, and individuals are some of these.
For its clients in the microfinance, small business, affordable housing, car, consumer, fintech, and mid-market corporate sectors, the company has so far made debt financing available to the tune of almost INR 90,000 crore. In deals that Northern Arc Capital planned and arranged, over 140 reputable investors (banks, asset managers, insurance companies, DFIs, private wealth, etc.) made investments.
The most recent investment from DFC is a resounding endorsement of Northern Arc’s capacity to maintain its clientele across all stages of the economic cycle and of its business model’s resiliency. It is also a tribute to Northern Arc’s capacity to underwrite, which has been developed through a thorough understanding of its industries, a sizable data warehouse, and unique analytics models.
About US International Development Finance Corporation
America’s development bank is called the U.S. International Development Finance Corporation (DFC). DFC collaborates with the business sector to finance responses to the most pressing problems now plaguing the developing world. We make investments in a variety of industries, such as energy, healthcare, vital infrastructure, and technology. To support the development of new markets and the creation of jobs, DFC also offers financing to small firms and female entrepreneurs. DFC Investments upholds strict standards and is mindful of the rights of the environment, people, and workers.
Northern Arc has made it a priority to give underserved people and companies effective access to debt financing starting in the fiscal year 2009. With this pledge, their company is now in compliance with five of the 17 Sustainable Development Goals (or “SDGs”) set forth by the United Nations, which recognize access to financial services as an important goal that must be accomplished by the end of the current fiscal year (FY) 2030. There should be “no poverty,” “zero hunger,” “gender equality,” “industry, innovation and infrastructure,” and “decent work and economic growth,” to name only five of the UNSDGs. As outlined below, their lending through their Originator Partners over the previous three fiscal years was done in an effort to increase access to debt financing.
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