Northern Arc Capital, one of India’s diversified financial services platforms, today announced that it has successfully concluded a $25 Million External Commercial Borrowing transaction with Proparco. Proparco is the private sector financing subsidiary of Agence Française de Développement Group (AFD Group). The AFD Group is a public financial institution that is owned by the French Government and implements France’s policy on international development and solidarity by supporting projects towards a fairer, more resilient world.
Northern Arc will use the proceeds to serve MSMEs and women entrepreneurs, especially amongst the next billion. The capital will be used to provide differentiated credit solutions to these customers both directly and through partners. The long tenor of the facility will provide Northern Arc the flexibility of serving these customers through a diverse set of solutions. The funding from Proparco will improve access to financing for around 21,000 micro-borrowers and MSMEs in India. It is estimated that the project will help the retention of 34,000 jobs.
Due to important impacts created among women entrepreneurs, the project qualifies for the 2X Challenge, a global gender finance initiative that Proparco has been contributing to since its launch in 2018. The Project also addresses 3 SDGs: SDG 8 (Decent Work and Economic Growth), SDG 5 (Gender Equality) and SDG 10 (Reduced Inequality).
Northern Arc serves these critical customer segments through it’s digital n-POS platform, which helps NBFCs, fintechs, digital lenders and investors co-lend to retail borrowers. The platform provides fully integrated systems for partners and investors, with real time KYC validation and instant disbursement features. It also provides investors access to the NAC score, a credit score that is based on the assessment of a borrower’s financial strength and propensity to repay, that has been developed by Northern Arc.
The scoring uses AI and ML algorithms and delves on over 25 million data points accumulated by Northern Arc over its past decade of working with more than 250 partner institutions across the country. The n-POS platform also helps investors with periodic reporting and portfolio reconciliations. It has so far enabled over 7.5 million loans to borrowers across the country.
“We are very pleased to partner with an institution like Northern Arc which has been working for Financial Inclusion in India since more than a decade. The Company’s mission to enable access to finance for the underbanked in an efficient, scalable and reliable way is in line with Proparco’s Financial Inclusion strategy in India. Northern Arc’s role as a bridge between originators serving financially excluded customer segments and debt capital market with the use of technology creates multiplier impacts. ” said Ms. Diane Jegam, Regional Director – South Asia, Proparco. Commenting on the ECB Transaction, Ashish Mehrotra, MD & CEO of Northern Arc Capital said, “This transaction is proof of Northern Arc’s ability to forge partnerships with and attract funding from reputed global DFIs. We are excited to partner with Proparco to cater to the diverse financial requirements of the next billion and emerging segments. The usage of proceeds will be towards enabling the next billion customers access financial services directly through digital channels as well as serving them through partnerships.” Over the last three years, Northern Arc has raised funds from a spectrum of reputed international investors including USDFC, ADB, FMO, Calvert Impact Capital and JICA
