Northern Arc Capital, a Chennai-based non-banking finance company, today announced that it has raised $25 million in external commercial borrowing (ECB) from Proparco, 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.

Serving enterprises and entrepreneurs

Northern Arc will use the proceeds to serve Micro, Small and Medium Enterprises (MSMEs) and women entrepreneurs, the debt financing platform said in a press release.

The capital will be used to provide differentiated credit solutions to these customers both directly and through partners. 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, it added.

Financial inclusion

“We are very pleased to partner with an institution like Northern Arc which has been working for financial inclusion in India for 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,” said Diane Jegam, Regional Director – South Asia, Proparco.

Over the last three years, Northern Arc has raised funds from various international investors including US DFC, Asian Development Bank, FMO, Calvert Impact Capital and JICA.

Ashish Mehrotra, MD and CEO, Northern Arc Capital said, “This transaction is proof of Northern Arc’s ability to forge partnerships with and attract funding from reputed global DFIs. The usage of proceeds will be towards enabling the next billion customers to access financial services directly through digital channels as well as serving them through partnerships.”

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