Northern Arc Capital Limited a diversified financial services platform catering to the diverse retail credit requirements of the under-served households and businesses in India. Over the last 14 years, company's approach has been to create a differentiated and comprehensive play on the retail credit ecosystem in India spread across sectors. Since 2009, when it entered the financial inclusion space, company have facilitated financing of over Rs 1.50 trillion to over 80.59 million lives across India.
It is one of the leading players amongst India’s diversified NBFCs in terms of Assets under Management as of March 31, 2023, with a business model diversified across offerings, sectors, products, geographies and borrower categories. Further, it has one of the lowest industry-wide credit costs amongst diversified NBFCs in India, as of March 31, 2023.
Strengths And Risks
+ Large addressable and underpenetrated market : India has a low credit penetration compared to developing countries, such as China, indicating a significant untapped potential with 230 million unbanked adults lives in India. Rural areas receive only 8% of the overall banking credit, there is a vast market opportunity for banks and NBFCs to lend in these areas.
+ Large ecosystem of partners and data and technology platform : Northern Arc has, over the last 14 years, served the Indian retail credit market and facilitated financing of over Rs. 1.50 trillion since 2009, impacting over 80.59 million lives, created an ecosystem of 306 Originator Partners, 48 Retail Lending Partners, and 1,007 Investor Partners.
+ Proprietary technology product: Company is a technology driven financial services platform supported by in-house technology solutions and architecture driving a scalable and sustainable business model that enables business expansion and revenue growth.
+ Robust risk management: Company leverages its own expertise and data to develop customized and proprietary risk models and enhance capital efficiency. Most of its credit risk management processes are enhanced through deep
analytical models built on Nimbus.
+ Strong ESG framework : Company enforces ESG parameters as part of its corporate governance commitment through an adherence to the LeapFrog group’s ‘Responsible Investment Code’, to deliver both financial and social results.
- High risk sector: Company has exposure to focused sectors such as micro, small, and medium enterprises financing, microfinance, consumer finance, vehicle finance, affordable housing finance and agriculture finance which carries higher risk.
- Funds Access: Northern Arc's business requires funds regularly, and any disruption in funding sources can adversely affect business. The ability to borrow funds can be affected by factors, such as our performance, credit ratings, regulatory restrictions and policy, liquidity in the credit markets etc.
- High credit risk borrowers : Company's business operations involve direct and indirect exposures to relatively high credit-risk borrowers in the underserved households and businesses of India. Any large-scale defaults in this category could adversely affect business.
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