In a first, the CDC Group, a UK based development finance Institution, has partnered with Indian NBFC Northern Arc to create its first pooled bond issuance (PBI). Through a first of its kind transaction in India, a PBI worth INR 320 crore will be deployed to provide systemic liquidity to six Indian microfinance institutions (MFIs).

The investment will support MFIs in providing over 6,30,000 new micro-loans to low-income households, primarily female and rural borrowers, increasing their access to finance and enabling them to manage cash flow and maintain or grow their businesses. The chosen MFIs are Annapurna Finance, Arohan Financial Services, ASA International, Asirvad Microfinance Limited, Chaitanya India and Fusion Microfinance.

Speaking about the development, Srini Nagarajan, MD & Head of Asia, CDC, commented, “This exciting partnership with Northern Arc marks CDC’s first Pooled Bond Issuance in India and comes at a time when systemic liquidity is critically needed to mitigate the impact of Covid-19 on vulnerable population in India.” He also commented that the investment will facilitate access for small businesses and will especially ensure that more women in India have improved access to finance, helping to uplift their livelihoods, households and communities.

The PBI product, developed by Northern Arc, pools together for one investor a set of debentures issued by diverse entities. These debentures are partially guaranteed by the Northern Arc.

Kshama Fernandes, CEO, Northern Arc Capital, said, “Northern Arc’s forte has been to introduce impact sectors to investors through its innovative products and structures. CDC’s first investment in a Pooled Bond Issuance in the microfinance sector in India is testament to this.”

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