The contingent credit solution of GuarantCo collaborates with Axis Bank, India’s third largest private sector bank, to provide Northern Arc Capital with INR 3.25 billion (c. USD 40 million) to ensure increased access to finance for underbanked borrowers in India. GuarantCo’s transaction will support Northern Arc to sustainably grow its loan portfolio within specific sectors such as microfinance, small business enterprises, commercial vehicle financing, affordable housing and education.

The proceeds, mobilised by GuarantCo, will be leveraged around five times over the five-year period of the facility, multiplying the number of borrowers benefiting from this initiative. Therefore, an estimated 200,000 low income and rural borrowers in India will ultimately benefit from an increased access to finance. Given that the Northern Arc will exclusively focus on female borrowers, it is expected that at least 50 percent of the beneficiaries will be women. Additionally, a large number of small and medium-size enterprises will benefit through increased access to finance via small business loans. The transaction demonstrates the benefits of offering longer tenors to Non-Banking Finance Companies which can be replicated in the future to benefit the local people and the economy.