Northern Arc, a prominent non-bank lender, has announced its ambitious plan to raise Rs 1,000 crore through an alternate investment fund (AIF). This initiative is spearheaded by its subsidiary, Northern Arc Investment Managers (NAIM), and aims to bolster financial inclusion and stimulate economic growth across various sectors as detailed in a report by the Press Trust of India.

Investment strategy focused on growth<o:p></o:p>

The report further stated that, the newly launched "Finserv Fund" is classified as a category II AIF, with the potential to raise an additional Rs 500 crore via a green shoe option. According to an official statement from the company, the fund will strategically allocate resources to six key sectors: small businesses, affordable housing, vehicle finance, agriculture finance, microfinance, and consumer finance. 

NAIM's Chief Executive Bhavdeep Bhatt highlighted that the AIF will target investments in approximately 45 to 55 entities over a four-year cycle. The fund aims to deliver an internal rate of return ranging between 14 per cent and 14.50 per cent for its investors. This approach not only focuses on higher risk-adjusted returns but also ensures regular cash flows for investors by investing in a diversified pool of debt securities from financial institutions.

Robust asset management framework<o:p></o:p>

As of June 30, 2024, Northern Arc boasts assets under management amounting to Rs 14,639 crore through its balance sheet and active AIF funds. The company has achieved notable success in fund exits, with returns ranging from 11.72 per cent to 15.77 per cent post-expense pre-tax. 

Northern Arc's Managing Director and Chief Executive Ashish Mehrotra emphasized the importance of their extensive network in managing this portfolio effectively. The company collaborates with 328 originator partners, 50 retail lending partners, and over 1,000 investor partners. This robust framework is expected to enhance the fund's performance while supporting its mission of increasing financial access across diverse sectors.

Northern Arc's initiative comes at a crucial time when financial inclusion remains a significant challenge in India. By targeting sectors that are often underserved, such as small businesses and affordable housing, the Finserv Fund aims to bridge the gap in access to finance for millions of individuals and enterprises.

The company's strategic focus aligns with broader economic goals aimed at fostering growth and stability within the financial ecosystem. As Northern Arc embarks on this fundraising journey, it seeks not only to generate attractive returns for investors but also to contribute positively to the economy by empowering various sectors that drive growth.

Hence, Northern Arc's launch of the Finserv Fund marks a significant step towards enhancing financial inclusion while offering lucrative investment opportunities. With a clear focus on diverse sectors and a strong asset management strategy, the company is poised to make a meaningful impact in the evolving landscape of India's financial services industry.

Northern Arc, a prominent non-bank lender, has announced its ambitious plan to raise Rs 1,000 crore through an alternate investment fund (AIF). This initiative is spearheaded by its subsidiary, Northern Arc Investment Managers (NAIM), and aims to bolster financial inclusion and stimulate economic growth across various sectors as detailed in a report by the Press Trust of India.

Northern Arc, a prominent non-bank lender, has announced its ambitious plan to raise Rs 1,000 crore through an alternate investment fund (AIF). This initiative is spearheaded by its subsidiary, Northern Arc Investment Managers (NAIM), and aims to bolster financial inclusion and stimulate economic growth across various sectors as detailed in a report by the Press Trust of India. Investment strategy focused on growth The report further stated that, the newly launched "Finserv Fund" is classified as a category II AIF, with the potential to raise an additional Rs 500 crore via a green shoe option. According to an official statement from the company, the fund will strategically allocate resources to six key sectors: small businesses, affordable housing, vehicle finance, agriculture finance, microfinance, and consumer finance. NAIM's Chief Executive Bhavdeep Bhatt highlighted that the AIF will target investments in approximately 45 to 55 entities over a four-year cycle. The fund aims to deliver an internal rate of return ranging between 14 per cent and 14.50 per cent for its investors. This approach not only focuses on higher risk-adjusted returns but also ensures regular cash flows for investors by investing in a diversified pool of debt securities from financial institutions. Robust asset management framework As of June 30, 2024, Northern Arc boasts assets under management amounting to Rs 14,639 crore through its balance sheet and active AIF funds. The company has achieved notable success in fund exits, with returns ranging from 11.72 per cent to 15.77 per cent post-expense pre-tax. Northern Arc's Managing Director and Chief Executive Ashish Mehrotra emphasized the importance of their extensive network in managing this portfolio effectively. The company collaborates with 328 originator partners, 50 retail lending partners, and over 1,000 investor partners. This robust framework is expected to enhance the fund's performance while supporting its mission of increasing financial access across diverse sectors. Northern Arc's initiative comes at a crucial time when financial inclusion remains a significant challenge in India. By targeting sectors that are often underserved, such as small businesses and affordable housing, the Finserv Fund aims to bridge the gap in access to finance for millions of individuals and enterprises. The company's strategic focus aligns with broader economic goals aimed at fostering growth and stability within the financial ecosystem. As Northern Arc embarks on this fundraising journey, it seeks not only to generate attractive returns for investors but also to contribute positively to the economy by empowering various sectors that drive growth. Hence, Northern Arc's launch of the Finserv Fund marks a significant step towards enhancing financial inclusion while offering lucrative investment opportunities. With a clear focus on diverse sectors and a strong asset management strategy, the company is poised to make a meaningful impact in the evolving landscape of India's financial services industry.

Northern Arc targets Rs 1,000 crore through innovative alternate investment fund

The Reserve Bank of India has rejected a proposal by big business&nbsp;houses asking to mull on granting them banking license.

India's central bank has modified the rules of ownership and the corporate structure of private banks in India.

Under the new rules significant shareholders in a non-state bank, known as bank promoters, must only reduce their stake to 26 per cent&nbsp;stake after 15 years, the central bank said, rather than to the current limit of 15 per cent&nbsp;within that timeframe.

The new norms allow those who have already diluted stakes to hike their shareholding.

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The Internal Working Group had made 33 recommendations, out of which the RBI has accepted 21.

"The remaining recommendations are under examination," the RBI said.

The central bank said payments banks must operate for at least five years before applying to become small finance banks (SFB), longer than the group's recommendation of three years of operations as sufficient to graduate into an SFB.

According to the RBI, ''This stipulation (concerning the dilution of promoters' stakes) should be uniform for all types of promoters and would not mean that promoters, who have already diluted their holdings to below 26 per cent, will not be permitted to raise it to 26&nbsp;per cent&nbsp;of the paid-up voting equity share capital of the bank.''&nbsp;

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Non-promoter shareholdings will continue to be capped at 10 per cent&nbsp;for individuals and non-financial institutions but will be allowed up to 15&nbsp;per cent&nbsp;of the equity share capital of a bank in the case of all categories of financial institutions, supranational institutions, public sector bodies or government, the RBI said.

A year ago an RBI working group recommended that&nbsp;banking regulations be amended to allow large industrial groups to act as&nbsp;bank&nbsp;promoters and own big stakes in a lender.

Such a move could transform the country's&nbsp;banking landscape but is something the central&nbsp;bank&nbsp;has strongly resisted in the past.

(With inputs from agencies)

The Reserve Bank of India has rejected a proposal by big business houses asking to mull on granting them banking license. India's central bank has modified the rules of ownership and the corporate structure of private banks in India.

The Reserve Bank of India has rejected a proposal by big business houses asking to mull on granting them banking license. India's central bank has modified the rules of ownership and the corporate structure of private banks in India. Under the new rules significant shareholders in a non-state bank, known as bank promoters, must only reduce their stake to 26 per cent stake after 15 years, the central bank said, rather than to the current limit of 15 per cent within that timeframe. The new norms allow those who have already diluted stakes to hike their shareholding. Also read | Indian crypto investors may get exit time if govt bans trade: Report The Internal Working Group had made 33 recommendations, out of which the RBI has accepted 21. "The remaining recommendations are under examination," the RBI said. The central bank said payments banks must operate for at least five years before applying to become small finance banks (SFB), longer than the group's recommendation of three years of operations as sufficient to graduate into an SFB. According to the RBI, ''This stipulation (concerning the dilution of promoters' stakes) should be uniform for all types of promoters and would not mean that promoters, who have already diluted their holdings to below 26 per cent, will not be permitted to raise it to 26 per cent of the paid-up voting equity share capital of the bank.'' Also read | Fifteen more countries recognise India's COVID-19 vaccination certificate Non-promoter shareholdings will continue to be capped at 10 per cent for individuals and non-financial institutions but will be allowed up to 15 per cent of the equity share capital of a bank in the case of all categories of financial institutions, supranational institutions, public sector bodies or government, the RBI said. A year ago an RBI working group recommended that banking regulations be amended to allow large industrial groups to act as bank promoters and own big stakes in a lender. Such a move could transform the country's banking landscape but is something the central bank has strongly resisted in the past. (With inputs from agencies)

Reserve Bank of India rejects proposal on corporate ownership of banks

As on August 31, 2020, around 26.6 per cent of the total customers of NBFCs availed moratorium and close to 44.9 per cent of their total loan outstanding was under moratorium.

NBFCs profitability may dampen due to loan impairment

The IMF has cut the global growth forecast citing sharp slowdown in developing economies like India. IMF gives two reasons, poor health of NBFCs & rural economy. Meanwhile a study shows the widening income inequality in India. Take a look.

Gravitas: 63 Indian Billionaires Have More Money Than The 2019 Budget

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