Northern Arc reported strong financial results for Q2FY25, with pre-provision operating profit (PPoP) surging 74% year-over-year (YoY) to INR 212 crore and profit after tax rising 24% YoY to INR 98 crore. Net Interest Income grew by 47% YoY to INR 288 crore, while Fee & Other income increased 29% YoY to INR 26 crore. Lending Assets Under Management (AUM) expanded 22% YoY, reaching INR 12,309 crore, with disbursements up by 23% YoY to INR 5,035 crore and Direct to Customer lending increasing to 52% from 43% YoY. Asset quality remained robust, with a Gross NPA ratio at 0.60% and a Net NPA ratio of 0.18%, supported by a strong provisioning coverage ratio of 72% on Stage III assets. Return on Assets held steady at 3.1%, and a fresh equity infusion of INR 500 crore through an IPO enhanced capital strength, with a Return on Equity at 12.7%. The total capital adequacy ratio stood at 24.9%, underscoring Northern Arc’s solid financial resilience and effective strategic execution.

Commenting on the Q2FY25 results MD & CEO Ashish Mehrotra said, “We are pleased to report another strong quarter of financial results, reflecting the resilience and effectiveness of our strategy. While we recognize the headwinds in today’s landscape, we remain dedicated to executing our vision with operational discipline. We continue to focus on growth in the MSME and other key sectors, while carefully calibrating our approach in the MFI segment. We are confident that our proactive measures, coupled with our diversified business model, will enable us to navigate these challenges and emerge stronger.”

The NCDs will be listed on BSE Limited (BSE) and have a tenure of five years. The funds raised through this issuance will be strategically deployed in retail microloans, MSME loans, and green loans, reflecting Northern Arc’s commitment to fostering inclusive economic growth and environmental sustainability.

Ashish Mehrotra, Managing Director & CEO of Northern Arc Capital, remarked, “This substantial investment from FMO underscores our unwavering commitment to transforming the financial landscape for under-served individuals and businesses in India. By channelling these funds into microloans, SMEs, and green projects, we aim to create a cascading effect that promotes sustainable economic growth and financial inclusion. Our innovative platforms, such as nPOS and Nimbus, play a crucial role in this mission by ensuring seamless loan processing and effective debt management.”

Northern Arc Capital’s dedication to leveraging technology is exemplified in its proprietary platforms, nPOS and Nimbus. nPOS, a cloud-based API-enabled platform, streamlines loan processes for partnership and co-lending businesses, while Nimbus provides comprehensive end-to-end debt transaction management. These innovations support efficient loan processing and debt management, ensuring that Northern Arc can meet the diverse needs of its clients with data and technology. ”

Huib-Jan de Ruijter, Chief Investment Officer at FMO, stated, “We are very pleased to be able to provide long-term funding for MFIs and NBFCs in India, which have limited access to term funding from capital markets. This local currency facility to Northern Arc, supports entrepreneurship and innovation and encourages the formalization and growth of SMEs and microenterprises. We want to thank Northern Arc for our partnership, enhancing financial inclusiveness across India.

As Northern Arc Capital continues its journey, the focus remains on innovation, resilience, and inclusivity for economic empowerment and sustainability. The latest investment from FMO reaffirms Northern Arc’s vision of creating a financially inclusive future, driving meaningful impact across India’s diverse communities.