Northern Arc, a non-banking financial company (NBFC), has announced the successful execution of a $20 million External Commercial Borrowing (ECB) facility for CA Grameen, a microfinance institution (MFI) headquartered in Tamil Nadu, India.
The funds will be used to support CA Grameen’s lending activities to underserved communities in rural and semi-urban regions of India, including the states of Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka. The financing comes at an opportune time as the Indian microfinance sector is experiencing strong demand from customers who need access to credit for various purposes, including agricultural activities, small business operations, and household expenses.
The ECB facility is a milestone for CA Grameen, as it represents the first time the MFI has accessed offshore funding. The company’s growth trajectory and responsible lending practices caught the attention of Northern Arc, which facilitated the transaction. This will help CA Grameen to fund its expansion plans and deliver more financial services to underserved communities in India.
Northern Arc has a proven track record of providing innovative debt solutions to financial institutions that serve low-income segments of the population. The company has previously executed several ECB transactions for MFIs and small finance banks in India, providing them with access to affordable financing from international investors.
Kshama Fernandes, CEO of Northern Arc, said, “We are delighted to have been able to support CA Grameen’s growth with this transaction. It has been a challenging year for the microfinance sector, and we are proud to have facilitated this deal amidst the COVID-19 pandemic. We look forward to working with CA Grameen in their journey of creating financial inclusion for underserved communities in India.”
CA Grameen was founded in 1993 and provides loans to over 1.4 million women from economically weaker sections of society. The MFI has a presence in over 200 districts across the four southern states of India, making it one of the largest microfinance institutions in the region.
The funding from Northern Arc will enable CA Grameen to expand its outreach further and offer loans to more women entrepreneurs, helping them to grow their businesses and improve their livelihoods. This will be critical in a post-pandemic world where women have been disproportionately affected by the economic fallout of the COVID-19 crisis.
Speaking about the funding, K. Devarajulu, MD of CA Grameen, said, “We are delighted to have partnered with Northern Arc for this milestone transaction. This funding will support our efforts to provide affordable credit to women from low-income households, helping them to create sustainable livelihoods. We thank Northern Arc for their support and look forward to a long-term relationship with them.”
Northern Arc’s Managing Director, Prashant Kotak, added, “CA Grameen has a rich legacy of serving rural India and contributing to financial inclusion.We are delighted to partner with CA Grameen and support their mission to improve access to credit for women from low-income households. We believe that this partnership will help them scale their operations and create a positive social impact.”
This investment is in line with Northern Arc’s mission to support financial access and inclusion for the underserved and financially excluded populations of India. They have invested in companies that are working to increase access to credit, savings and insurance products for low-income households.
The successful execution of this ECB facility for CA Grameen is a testament to Northern Arc’s commitment to supporting financial inclusion in India. The company has carved out a niche for itself in the financial services sector by providing customized debt solutions to financial institutions that serve underserved communities. As the Indian economy recovers from the pandemic, it is likely that demand for affordable credit will continue to grow, and Northern Arc is well-positioned to meet this demand.
