US-based Calvert Impact Capital has invested $10 million in debt financing through External Commercial Borrowing (ECB) in debt platform Northern Arc Capital.

This debt funding is touted to be the largest debt investment by Calvert Impact Capital in India so far.

Bama Balakrishnan, COO, Northern Arc, said, “The partnership with Calvert Impact Capital is long-term and multi-dimensional, helping both organizations achieve common goals across impact and growth. These include aiding small businesses and promoting gender equity, a cause that is strongly endorsed by both organizations. The facility’s longer duration will expand Northern Arc’s ability to fund MSMEs and households.”

Chennai-based debt platform Northern Arc (formerly known as IFMR Capital Finance Limited) is an NBFC that provides access to debt for under-banked individuals and businesses in India. Northern Arc and its subsidiaries have created a platform that connects millions of borrowers to mainstream debt investors. Since its inception, it has enabled over $12 billion of financing to over 200 partner organizations through 140 reputed domestic and global investors.

According to a company statement, the capital will be deployed towards on-lending to financial institutions as well as to lend directly to retail customers and mid-market corporates. A key focus will be on providing funds to under-banked customers, including low-income households and small businesses who have been adversely affected due to the pandemic. These funds will be disbursed directly by Northern Arc as well as through on-lending to partner institutions.

Speaking about the investment Daniel Ford, Investment Officer, Calvert Impact Capital, said, “Northern Arc has been instrumental in strengthening Indian debt capital markets to the benefit of organizations serving under-banked populations. Today, more than ever, these companies and their clients benefit from access to a diversity of funding sources and the relationship-based approach of the Northern Arc model. As an investor, we benefit from leveraging the market and credit expertise of the Northern Arc team as we put capital to work for impact in India.”