Non-bank lender Northern Arc Capital has received Rs 40 crore ($5.34 million) debt financing from mid-sized private-sector lender Kotak Mahindra Bank to support pandemic-hit micro-entrepreneurs and micro, small and medium enterprises (MSMEs).
“The facility is backed by partial guarantees from The Michael & Susan Dell Foundation and The Rockefeller Foundation,” the non-banking financial company (NBFC) said in a statement.
Chennai-based Northern Arc Capital (formerly IFMR Capital Finance) is a digital debt platform that caters to the under-banked in India.
The proceeds from this investment will be used to lend to retail households and micro-entrepreneurs with a household monthly income of less than Rs 25,000, the statement said.
This year, the non-bank lender invested in student-focused Eduvanz and consumer-focused True Balance.
Earlier this month, Northern Arc Investments, the debt fund manager owned by Northern Arc Capital, announced the closure of its first fund.
Over the last year, Northern Arc Capital has attracted debt financing from an array of global development finance institutions (DFIs) and impact investors such as US International Development Finance Corporation, Asian Development Bank, Calvert Impact Capital, and FMO.
The funds raised have been instrumental in financing micro-loan borrowers and SMEs in India, who were severely impacted by the pandemic in the last one year.
As of March-end 2021, the NBFC had enabled financing of around Rs 95,000 crore for its clients.
Over 140 players (banks, asset managers, insurance companies, DFIs, etc.) have invested in transactions structured and arranged by Northern Arc Capital.
Northern Arc Investments manages over Rs 2,000 crore ($300 million) in commitments.
