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Northern Arc Capital raises $25M in ECB from Proparco

Northern Arc Capital, one of India’s most diverse financial services platforms, announced today that it has completed a $25 million External Commercial Borrowing deal with Proparco. Proparco is Agence Française de Développement Group’s private sector lending division (AFD Group). The AFD Group is a public financial company owned by the French government that carries out France’s policy of worldwide development and solidarity by funding initiatives that aim to make the world a fairer and more resilient place.

Northern Arc intends to use the earnings to help MSMEs & women entrepreneurs, particularly among the next billion. The funds will be utilized to provide these consumers with innovative credit alternatives both directly as well as through partners. Northern Arc will be able to serve these clients through a variety of options due to the facility’s lengthy tenure. Proparco grant will boost access to credit for approximately 21,000 micro-borrowers & MSMEs in India. The initiative is expected to aid in the retention of 34,000 employees.

Because of the significant benefits made among female entrepreneurs, the venture qualifies for the 2X Challenge, a worldwide gender finance program to which Proparco has contributed from its inception in 2018. The project also covers three SDGs: SDGs 8, 5, and 10. Northern Arc supports these essential client categories with its digital n-POS platform, which enables NBFCs, fintechs, digital lenders, and investors to collaborate on retail lending. The platform offers completely integrated systems for investors and partners including real-time KYC confirmation and fast payout. It also gives investors access to the NAC score, a credit score produced by Northern Arc that is based on an evaluation of a borrower’s financial health and tendency to repay.

The grading is based on over 25 million data points collected by Northern Arc over a decade of collaboration with more than 250 partner institutions all over the country. Investors can also use the n-POS platform for periodic reporting & portfolio reconciliation. So far, it has enabled approximately 7.5 million loans to be made to borrowers across the country.

“We are delighted to collaborate with an organization like Northern Arc, which has been fighting for financial inclusion in India for more than a decade.” The Company’s aim to provide underbanked people with access to credit in an efficient, scalable, and dependable manner aligns with Proparco’s Financial Inclusion plan in India. Northern Arc’s function as a technology-enabled bridge between originators servicing financially excluded consumer categories and the debt capital market generates multiple effects. Ms. Diane Jegam, Proparco’s Regional Director For South Asia, stated.

In response to the ECB deal, Northern Arc Capital’s MD & CEO, Ashish Mehrotra, stated, “This transaction demonstrates Northern Arc’s capacity to form alliances with and attract capital from respected worldwide DFIs. We are thrilled to be collaborating with Proparco to meet the diversified financial needs of the next billion and developing segments. The funds will be used to provide the next billion clients with direct access to financial services via digital channels, as well as to serve them through partnerships.” Northern Arc has raised financing from a variety of reputable international investors over the previous three years, including USDFC, ADB, FMO, Calvert Impact Capital, and JICA.”

Northern Arc Capital seems to be promoting new financial services  platforms. Congratulations on your startup. May this new business bring you huge success and fulfillment.

Shishir Gupta, Founder and CEO, StartupLanes

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