End poverty in all its forms everywhere

Access to financial services is essential to ensure economic and social well-being, maximizing income opportunities and enhancing the quality of life and standard of living. Across several developing economies including India, access to financial services is often a key factor that has the potential to uplift millions from the clutches of poverty. However, lack of appropriate documentation, inaccessibility to branch banking, financial illiteracy and other societal barriers result in large sections of the population being excluded from the spectrum of financial services in India. As per the NABARD All India Financial Inclusion Survey (2016-17) and the Global Findex Database 2017, only 9% of the 1.3 billion Indian population had access to formal financial services.

By investing in companies that on-lend to individuals who are economically underserved, we strive to support our portfolio companies towards improving the lives of financially un-served or under-served individuals, helping them grow their portfolios by lending to new and existing customers across the country, including some of the most underpenetrated regions of the country.

End hunger, achieve food security and improved nutrition and promote sustainable agriculture

India, home to 18% of the global population, is ranked 102 out of 117 countries in the Global Hunger Index 2019. As per a United Nations estimate, there are 195 million undernourished people in India, and 25% of the country’s population goes hungry. India is primarily an agrarian economy with over 60% of the Indian population relying on agriculture and agriculture allied activities for their daily livelihood. Farmers in India, however, face a number of challenges including limited access to finance, uncertain monsoons and perishability of goods, which limit their ability to earn a stable income throughout the year and thereby impacting their livelihood.

Northern Arc identifies companies that provide dairy & livestock loans, engage in supply chain financing or financing of related agricultural activities, institutions that engage in warehouse receipt financing, collateral management, procurement and trade facilitation, that aid a smoother supply of goods to the end customers, directly or indirectly impacting the livelihood of the end borrowers.

Ensure inclusive and quality education for all and promote lifelong learning

While education is universally accessible in India, creating the right environment with adequate infrastructure is pertinent to ensuring quality education. Most affordable educational institutions in India, however, have limited access to finance which impacts their ability to offer superior educational and vocational services.

Northern Arc identifies and invests in companies that not only cater to this gap by providing customized and affordable loans to educational institutions but also assist in increasing enrolment to schools by supporting tuition fees.

Achieve gender equality and empower all women and girls

While there exists a gender gap across many countries in the world, this difference is far starker in India, where a major part of the society continues to perceive the role of women to revolve around the homefront. While the situation has been improving over the years, World Bank studies estimated India to have a female labour force participation rate of 23% in 2019, much lower when compared to other large economies such as Brazil, China and the United States.

By investing in companies that support the empowerment of women at the workplace and on the ground through on-lending for a) income-generating activities b) products that have a positive impact on the physical & mental well-being of women, Northern Arc strives to create a society that promotes equal opportunity where women assume a central role in the decision making. In addition to offering loans to women customers, our portfolio companies also implement several programmes that support skill development, financial planning and literacy for women borrowers thereby providing them with the necessary knowledge and knowhow to scale their businesses.

Ensure access to water and sanitation for all

In India, the number of people practising open defecation decreased by 55% from 767 million to 344 million between 2000 and 2017, however, India still had the largest number of people practising open defecation in 2017. While several low-income households intend to build toilets, high upfront costs involved in connecting with piped water supply or constructing a latrine often act as a deterrent to many. Open defecation not only has a severe ecological impact owing to the high content of methane release but is a threat to the safety, health and dignity of women along with long-term psychological impact. Northern Arc identifies and invests in companies that provide loans for construction of toilets, and promotes the origination of water and sanitation loans which typically do not fall under typical lending.

Promote inclusive and sustainable economic growth, employment and decent work for all

Northern Arc identifies and invests in companies that support small scale businesses, last-mile borrowers and financially excluded individuals by providing innovative financial assistance, tools and solutions, fostering growth and employment in inaccessible areas of rural India. This promotes income generating opportunities for millions of individuals, some of who do not have any prior access to financial services or formal income, thereby providing them with an opportunity to positively contribute towards their own as well as overall economic growth of the society at large.