Jakarta: The Asian Development Bank (ADB) signed a $40 million loan (in Indian rupee equivalent) to Northern Arc Capital Limited (NACL) to support the livelihoods of microfinance borrowers and micro, small, and medium-sized enterprises (MSMEs) in India.
The loan is disbursed to NACL as part of ADB’s ongoing COVID-19 response. NACL will on-lend the loan proceeds and provide guarantees to financial institutions and individual borrowers. NACL will also on-lend to affordable housing finance companies.
"The pandemic has had a deep impact in the country’s informal economy, especially among microfinance borrowers and MSMEs. NACL’s unique business model of working with the most impacted segment of MSMEs and financial institutions makes them an ideal partner,” said ADB’s Private Sector Operations Department Director Christine Engstrom in a press release on Monday.
"This project will provide additional support for the Government of India’s ongoing efforts to kickstart credit flow to this segment of the economy," Engstrom stated.
NACL is a pioneer in the financial sector in India. It connects NBFCs, microfinance institutions and housing finance companies to mainstream financers for debt fundraising through a variety of products, such as partial risk guarantees for capital markets issuances, multi-originator securitization, and pooled loan/bond issuance. T
his enables smaller and mid-sized NBFCs to deepen their presence and improve access to financial services to millions of financially excluded households in India.
Its innovative solutions have enabled around 250 partners, serving nearly 60 million customers across 680 districts across India, access funding from reputable investors.
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