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CDC tied up with Northern Arc for PBI to support MFIs

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Northern Arc Capital partners CDC Group to create first pooled bond issuanceThe CDC Group, the UK government’s development finance institution, has made a partnership with Northern Arc Capital Limited(NACL), for investing a total of Rs 320 crore under pooled bond issuance (PBI) to support six leading Indian microfinance institutions(MFIs).CDC’s Rs 320 crore investment in a pool of NACL is its first-ever transaction in India .

  • The investment will support MFIs by providing over 6.3 lakh micro-loans to low-income households (primarily female and rural borrowers).
  • CDC Group (“CDC”) will invest in the non-convertible debentures (“NCDs”) of six leading Indian microfinance institutions: Annapurna Finance, Arohan Financial Services, ASA International, Asirvad Microfinance Limited, Chaitanya India and Fusion Microfinance.

Objective: To facilitate finance to the small businesses especially for women to empower them by uplifting their livelihoods.

Key points:

  • After this, it is planning to invest in the same structure in future.
  • In 2021 CDC is aiming to invest over $1.75 billion in companies in Africa and Asia

About Pooled Bond Issuance(PBI):

  • It is a kind of bond issuance in the form of pooled funds, in which pooled funds are the funds in a portfolio from many individual investors for the purposes of investment.
  • Examples:  Mutual funds, hedge funds, exchange-traded funds, pension funds, and unit investment trusts.

Recent Related News:

On December 21, 2020, The Asian Development Bank (ADB) signed a $40 million (around Rs 295 crore) loan to Northern Arc Capital Ltd(NACL) for on-lending to microfinance borrowers, Micro, Small, and Medium Enterprises (MSMEs) and affordable housing finance companies in India.

About CDC Group:

Establishment – 1948
Headquarters – London, United Kingdom
CEO – Nick O’Donohoe

About Northern Arc Capital Limited(NACL):

It is a leading digital debt platform that addresses the credit requirements of the underbanked in India.
Note – underbanked refers to individuals or families who often rely on alternative financial services such as money orders, and payday loans rather than on traditional loans and credit cards.
Establishment – 2008
Headquarters – Chennai, Tamil Nadu
CEO – Kshama Fernandes