Chennai-based digital debt platform Northern Arc Capital has raised $10 million in debt from US-based Calvert Impact Capital via External Commercial Borrowing (ECB).
According to the company, this is Calvert Impact Capital’s largest debt investment in India so far. Northern Arc will deploy the funds towards on-lending to financial institutions as well as lending directly to retail customers and to mid-market corporates.
Bama Balakrishnan, Chief Operating Officer of Northern Arc, said,
“The partnership with Calvert Impact Capital is long-term and multi-dimensional, helping both organisations achieve common goals across impact and growth. These include aiding small businesses and promoting gender equity, a cause that is strongly endorsed by both organisations. The facility’s longer duration will expand Northern Arc’s ability to fund MSMEs and households.”
Underbanked customers, including low-income households and small businesses to whom credit has dried up over the last few months due to the pandemic, will be a key beneficiary of the proceeds, the firm said. These borrowers will be served both directly by Northern Arc as well as through on-lending to partner institutions.
Similarly, high-quality Non-Bank Financial Corporations (NBFCs), early-stage businesses, and small and medium enterprises (SMEs) that have strong business models but are facing liquidity crunch will also benefit from this financing.
“Northern Arc has been instrumental in strengthening Indian debt capital markets to the benefit of organisations serving underbanked populations. Today, more than ever, these companies and their clients benefit from access to a diversity of funding sources and the relationship-based approach of the Northern Arc model. As an investor, we benefit from leveraging the market and credit expertise of the Northern Arc team as we put capital to work for impact in India,” added Daniel Ford, Investment Officer, Calvert Impact Capital.
Northern Arc Capital Limited (formerly known as IFMR Capital Finance Limited) is a non-banking finance company that provides access to debt for under-banked individuals and businesses in India. Through a combination of capital, products, and partnerships, Northern Arc and its subsidiaries have created a platform that connects millions of borrowers to mainstream debt investors.
Since its inception, it has enabled over $12 billion of financing to over 200 partner organisations through 140 reputed domestic and global investors.