Annual Report 2025-26
Chairman’s letter to shareholders
Carrying forward a legacy of purpose, resilience and responsible growth.
Dear Shareholders,
India’s long-term growth story is entering a new phase. For many years, the country’s economic progress was driven by expanding productive capacity and infrastructure development. Today, that foundation is being complemented by a profound transformation in the financial ecosystem. Rapid formalisation of the economy, widespread digital adoption, improving public digital infrastructure and a stable policy environment are fundamentally changing how households and businesses access formal finance. As Millions of individuals and enterprises become part of the organised economy, the demand for timely, transparent and responsible credit is growing at an unprecedented pace.
What is particularly encouraging is that this transformation is not merely expanding the availability of credit; it is improving the quality of credit delivery. The emergence of Digital Public Infrastructure, including Aadhaar, UPI, Account Aggregator, OCEN (Open Credit Enablement Network) and the Unified Lending Interface (ULI), together with richer digital data trails, is enabling lenders to make faster, more informed and more inclusive credit decisions. These developments are reducing information asymmetry, lowering transaction costs and expanding access to borrowers who would have traditionally remained outside the formal financial system. Credit is increasingly becoming data-led rather than collateral-led, creating opportunities for responsible lenders to serve customers with greater precision while maintaining strong underwriting standards.
Within this evolving landscape, Non-Banking Financial Companies (NBFCs) have emerged as an indispensable pillar of India’s financial architecture. Over the years, NBFCs have complemented the banking system by serving segments that require specialised underwriting, local market understanding and greater operating flexibility. Their ability to innovate, build customer-centric distribution models and respond quickly to changing market needs has enabled them to play a pivotal role in expanding financial inclusion across MSME finance, consumer lending, affordable housing, rural finance and other underserved segments.
The sector itself is also evolving. The next phase of growth will not be defined merely by expanding loan books but by building stronger institutions. Increasing collaboration between banks and NBFCs through co-lending, securitisation and partnership-led models is creating a more integrated and efficient credit ecosystem. At the same time, the regulatory emphasis on governance, capital adequacy, risk management and customer protection is strengthening the long-term resilience of the sector. We believe this evolution will distinguish institutions that pursue sustainable, risk-adjusted growth from those driven solely by scale.
It is against this backdrop that Northern Arc’s strategy assumes even greater relevance. Our diversified business model, technology-led operating platform, disciplined risk culture and ecosystem-based approach position us to participate meaningfully in India’s next phase of credit expansion. More importantly, they enable us to contribute towards building a financial system that is broader, deeper and more inclusive. As India’s credit markets continue to mature, we remain confident that institutions combining purpose with prudence, innovation with governance and growth with resilience will create enduring value for all stakeholders.
As I reflect on Northern Arc’s journey, this thought resonates deeply. Over the past sixteen years, we have not merely built a financial institution; we have built an institution founded on purpose, strengthened by discipline and guided by the belief that access to finance has the power to transform lives. Every phase of our journey has reinforced a simple conviction – enduring institutions are built by balancing ambition with responsibility, innovation with governance, and growth with resilience.
Institutions that combine technology, prudent underwriting and sound governance will play an increasingly important role in this evolution.
Northern Arc was founded with this belief. Our objective has never been simply to build a larger lending institution. It has been to build an ecosystem that strengthens India’s credit markets by connecting borrowers, originators, lenders and investors through technology, data and disciplined risk management.
Over the years, this vision has evolved into a diversified financial services platform serving multiple sectors that are central to India’s development, including MSME finance, consumer finance, microfinance, affordable housing, vehicle finance, agricultural value chains and climate finance. Each of these businesses addresses a distinct need, but together they serve a common purpose, enabling the seamless flow of credit to underserved households and businesses across India.
FY26 marked another important milestone in this journey. Northern Arc delivered its highest-ever annual Profit After Tax of INR 406 Crore, resulting in year-on-year growth of 33%. Lending Assets Under Management grew by 22% year-on-year to INR 16,594 Crore. Our Credit Solutions platform continued to deepen its reach, with performing credit funds managing assets of INR 3,092 Crore. Since inception, we have enabled financing of more than INR 2.5 Lakh Crore through a nationwide network comprising 357 originator partners, 57 digital partners, 432 branches and over 1,500 investor relationships.
While these achievements are encouraging, what gives me greater confidence is the quality of the institution that has produced them.
Northern Arc today is built upon a diversified business model, a resilient balance sheet, a strong liability franchise, disciplined capital allocation and an unwavering commitment to prudent risk management. Diversification across businesses, customer segments, geographies, funding sources and distribution channels has enabled us to remain resilient across changing economic and credit cycles. This resilience has been demonstrated repeatedly through periods of uncertainty, reinforcing our confidence that sustainable growth is built on consistency rather than short-term momentum.
One of the Board’s foremost responsibilities is to ensure that the institution never compromises long-term sustainability in pursuit of short-term growth. I am encouraged that the management team remains firmly aligned with this philosophy. Every strategic decision, whether relating to business expansion, technology investments, capital allocation or risk governance, is evaluated through the lens of creating durable, long-term shareholder value.
Technology continues to distinguish Northern Arc, not merely because of the platforms we have built, but because of how thoughtfully they are integrated into our business. Platforms such as Nimbus, nPOS, NuScore and Altifi have significantly enhanced our ability to originate, underwrite, monitor and distribute credit at scale. Yet, technology alone does not build enduring financial institutions. It must be complemented by sound governance, experienced judgement and a culture that values prudence as much as innovation. It is this combination that differentiates Northern Arc.
Every enduring institution is ultimately built by its people.
Over the years, Northern Arc has nurtured an entrepreneurial culture that encourages ownership, collaboration and continuous learning while remaining firmly anchored in integrity and accountability. As the organisation enters its next phase of growth, investments in leadership development, digital capabilities, advanced analytics and artificial intelligence will further strengthen our ability to serve customers and partners while preserving the values that have shaped our institution since its inception.
Financial inclusion remains our most meaningful contribution to sustainable development. Every responsibly underwritten loan has the potential to create livelihoods, strengthen enterprises and improve communities. Whether by supporting small entrepreneurs, enabling affordable housing, financing rural livelihoods or expanding access to clean energy, we continue to demonstrate that commercial success and positive societal impact can reinforce one another.
As we look ahead, India’s long-term opportunity remains compelling. Rising aspirations, increasing formalisation, rapid digital adoption and continued policy support will expand the country’s credit needs for many years to come. Institutions that combine purpose with discipline, innovation with governance and growth with responsibility will be best positioned to create enduring value.
I believe Northern Arc enters this next phase from a position of considerable strength. We are supported by an experienced leadership team, a committed workforce, a highly engaged Board, strong governance standards and a business model that has demonstrated resilience across multiple economic cycles. Most importantly, we remain guided by a clear sense of purpose that continues to shape every decision we make.
Financial inclusion remains our most meaningful contribution to sustainable development. Every responsibly underwritten loan has the potential to create livelihoods, strengthen enterprises and improve communities.
On behalf of the Board, I extend my sincere gratitude to our shareholders for your continued trust and confidence. I also thank our customers, originator partners, lenders, investors, regulators and the communities we serve for their unwavering support. Above all, I thank our employees, whose commitment, integrity and passion continue to define Northern Arc’s success.
Our responsibility as a Board extends beyond delivering another year of strong financial performance. It is to ensure that Northern Arc remains trusted, well governed and resilient for decades to come.
I am confident that we will continue to honour that responsibility while creating sustainable value for our shareholders and contributing meaningfully to India’s journey of inclusive economic growth.
Warm Regards,
P.S. Jayakumar Chairman