Annual Report 2025-26
Financial inclusion is the heart of Northern Arc’s sustainability agenda. Guided by the ideals of sustainable financial growth, it is our mission to enable access to finance for the underbanked in an efficient, scalable and reliable manner. By embedding sustainability into our strategy and operations, and supporting businesses with strong environmental, social and governance practices, we strive to create long-term value while advancing financial inclusion powered by the transformative force of capital.
Northern Arc Capital places long term business sustainability at the core of its business activities and adopts sustainability principles across its operations. Sustainability is built on three pillars: Environment, which focusses on leaving the planet in a better condition for future generations; Social, which focusses on creating a positive impact on society; and Governance, which focusses on ensuring transparency, accountability, and ethical conduct in business operations. Aligning with globally-recognised sustainability principles, we strive to improve our business and operations to benefit our stakeholders.
As a company, we are in the fortunate position of being able to provide access to finance for the underbanked in an efficient, scalable and reliable manner. Our endeavour is to ensure that every individual has adequate access to finance, but this needs to be done in a way that it takes into account our wider responsibilities to the society and the environment. Our vision is to be a trusted platform that enables the flow of finance from capital providers to users in a reliable and responsible manner.
Microfinance
Through Microfinance, we expand access to responsible credit for women and low-income households who are often underserved by the formal financial system. Access to timely finance enables borrowers to invest in income-generating activities, smooth household cash flows and build financial resilience while reducing dependence on informal sources of credit. As livelihoods strengthen and financial independence grows, households are better positioned to improve their quality of life, participate more actively in the formal economy and create sustainable pathways out of vulnerability. We have 61 Originator Partners onboarded for Microfinance. During the year, finance provided by 21 of them was benefitting more than 2.81 Crore beneficiaries. Of these, we estimate that more than 23 Lakh beneficiaries are attributable to our finances to such Originator Partners.
MSME Finance enables entrepreneurs and small businesses to access growth capital that supports business expansion, working capital requirements and investment in productive assets. Improved access to finance allows enterprises to enhance productivity, strengthen competitiveness and create employment opportunities, generating positive multiplier effects across local economies. By supporting enterprise growth and formalisation, we contribute to resilient businesses, stronger value chains and inclusive economic development. We have 104 Originator Partners onboarded for MSME Finance. During the year, finance provided by 47 of them was benefiting approximately more than 1.08 Crore beneficiaries. Of these, we estimate more than 25 Lakh beneficiaries are attributable to our finances to such Originator Partners.
MSME Finance
Vehicle Finance
Through Vehicle Finance, we enable access to productive mobility assets that help individuals and businesses generate sustainable livelihoods. Financing for commercial vehicles supports income generation and business continuity, while expanding access to electric vehicles and related infrastructure contributes to the transition towards cleaner transportation. Together, these outcomes improve economic opportunity, strengthen connectivity and support more sustainable mobility systems. We have 46 Originator Partners onboarded for Vehicle Finance. During the year, finance provided by 24 of them was benefiting more than 35 Lakh beneficiaries. Of these, we estimate nearly 6 Lakh beneficiaries are attributable to our finances to such Originator Partners.
Consumer Finance expands access to responsible and regulated credit, enabling households to meet essential financial needs through formal lending channels. By reducing reliance on informal borrowing, strengthening credit histories and improving financial resilience, access to formal finance supports greater financial security and inclusion. Over time, these outcomes enable households to better manage financial shocks and participate more confidently in the formal economy. We have 44 Originator Partners onboarded for Consumer Finance. During the year, finance provided by 22 of them was benefiting more than 3.25 Crore beneficiaries. Of these, we estimate nearly 60 Lakh beneficiaries are attributable to our finances to such Originator Partners.
Consumer Finance
Affordable Housing Finance
Affordable Housing Finance enables families to access safe, quality housing while supporting long-term asset creation and financial security. Stable housing contributes to improved health, well-being and living conditions, while providing households with greater economic stability and opportunities for future generations. By expanding access to housing finance for underserved communities, we support more resilient families and inclusive community development. We have 45 Originator Partners onboarded for Affordable Housing Finance. During the year, finance provided by 19 of them was benefiting approximately 2.5 Lakh beneficiaries. Of these, we estimate more than 40 thousand beneficiaries are attributable to our finances to such Originator Partners.
Agriculture Supply Chain Finance strengthens financing across the agricultural ecosystem by supporting farmers, producer organisations, agri-enterprises and other value chain participants. Improved access to working capital and value chain financing enhances productivity, strengthens market linkages and improves cash flows across the agricultural ecosystem. These outcomes contribute to more resilient rural livelihoods, stronger agricultural value chains and sustainable economic development in rural communities. We have 13 Originator Partners onboarded for MSME Finance. During the year, finance provided by 4 of them was benefiting more than 88 thousand beneficiaries. Of these, we estimate more than 11 thousand beneficiaries are attributable to our finances to such Originator Partners.
Agriculture Supply Chain Finance
Investing in Climate Solutions
In line with our commitment to responsible financing, we support the transition towards a more sustainable economy by enabling access to capital for businesses and financial institutions driving climate and sustainability-linked solutions. We support the transition towards a more sustainable economy by enabling access to finance for businesses operating across the climate and sustainability ecosystem, as well as financial institutions that on-lend to entities in sectors such as renewable energy and electric mobility. During the year, Northern Arc Capital Limited provided funding to three financial institutions that support climate-focussed sectors through onward lending, while also directly financing 22 entities engaged in renewable energy, electric mobility, energy infrastructure, battery swapping and EV charging, sustainable transportation, waste management, circular economy solutions, and clean energy and infrastructure assets.
Scaling Impact Through Responsible Finance:
Together, these interventions address diverse financing needs while contributing to more inclusive, resilient and sustainable communities. As we continue to strengthen our financial inclusion ecosystem, we remain committed to leveraging responsible finance, strategic partnerships and digital innovation to expand access to opportunity. By connecting capital with underserved communities and sustainable enterprises, and measuring the outcomes enabled through our financing, we aim to create long-term value for individuals, businesses, communities and the broader economy, contributing to a more inclusive and sustainable future.
Sustainable Development
Northern Arc contributes to United Nations’ Sustainable Development Goals, as summarised below.
| UN SDGs | Goal | Northern Arc’s Impact |
|---|---|---|
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End poverty in all its forms everywhere. | We contribute to UN SDG Target 1.4 by creating access to financial services through our Originator Partners and retail lending partners. |
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End hunger, achieve food security and improved nutrition and promote sustainable agriculture. | We contribute to UN SDG Target 2.3 by offering access to finance for agriculture practices through our microfinance and agriculture supply chain Originator. |
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Achieve gender equality and empower all women and girls. | We contribute to UN SDG Target 5.a by facilitating access to finance through joint liability group loans, significantly benefitting women via our microfinance Originator Partners. Additionally, our lending efforts through other Originator Partners, retail lending partners, and retail branches include tailored products specifically for women. |
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Ensure access to affordable, reliable, sustainable and modern energy for all. | We contribute to UN SDG Target 7.a by financing entities in the green energy sector such as renewable energy (wind and solar), electric vehicle (EV) manufacturers, EV charging stations, and related infrastructures. |
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Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. | We contribute to UN SDG Target 8.10 by expanding access to finance through our retail branches and strengthened the access to financial services through our Originator Partners and retail lending partners. |
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Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation. | We contribute to UN SDG Target 9.3 by enhancing access to finance for small-scale industries and enterprises through our loan against property and supply chain finance programs. Additionally, we have facilitated financial services for small businesses through our small business loan offerings and Originator Partners. |
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Reduce inequality within and among countries. | We contribute to UN SDG Target 10.2 by promoting economic inclusion for all individuals, regardless of age, sex, disability, race, ethnicity, origin, religion, or socioeconomic status, through various financial inclusion models. Through our Originator Partners, retail branches, and retail lending partners, we enable access to finance for the underbanked and underserved. |
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Take urgent action to combat climate change and its impacts. | We contribute to UN SDG Target 13.1 by financing entities across the clean energy and sustainability ecosystem, including renewable energy (wind and solar), electric vehicle (EV) manufacturers, EV charging infrastructure, sustainable agriculture practices, agricultural supply chains, and waste management solutions such as recycling and biogas generation. In addition, we have supported financial institutions that extend financing to businesses operating in the renewable energy and EV sectors, helping expand the flow of capital to climate-focussed enterprises. |
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Strengthen the means of implementation and revitalise the Global Partnership for Sustainable Development. | We contribute to UN SDG Target 17.3 by securing funds from various international Development Finance Institutions (DFIs) for on-lending to other financial institutions. Additionally, we have mobilised funds for these institutions from offshore investors and lenders through mechanisms such as Non-Convertible Debentures, and External Commercial Borrowing. During the year, we successfully facilitated a total placement volume of INR 11,834 Crore including offshore funding of INR 2,350.84 Crore through leading international banks and offshore lenders, strengthening access to diversified sources of global debt capital for Indian financial institutions. |
Shaping our approach through sustainability
Anchored in our purpose, responsive to a changing landscape, and forward-looking in our approach, we aim to contribute to a more resilient, inclusive, and sustainable future. We strive to evolve a financial business ecosystem where sustainability shapes how we operate, allocate capital, and engage with stakeholders. Our approach is guided by the belief that long-term value creation is closely linked with environmental stewardship, social inclusion, and strong governance.
Building on this foundation, we will further advance environmentally conscious practices within our operations, expand access and opportunity across the communities we serve, and strengthen governance frameworks that reinforce accountability and trust. Through purposeful capital, collaborative partnerships, and the continued strengthening of internal capabilities, we seek to create impact that is both meaningful and enduring.
(Score 78 - Good)
Northern Arc’s financial services business model is inherently resource-light, with limited direct environmental impact and modest energy consumption. Scope 1 and Scope 2 emissions remained low at 9.4 tCO2e and 929 tCO2e, respectively.
Environmental performance is supported by green-certified office facilities, LED lighting, rainwater harvesting and wastewater recycling at select locations, alongside increasing digitalisation of operations. Digital documentation and workflows have significantly reduced paper usage, helping conserve approximately 11 Crore sheets of paper, thereby lowering resource consumption and improving operational efficiency.
Environmental governance is underpinned by a dedicated Environment & Climate Change Policy and regular monitoring through the Company’s Environmental and Social Management System (ESMS), which screens environmental and social risks associated with the lending portfolio.
Going forward, Northern Arc remains focussed on strengthening environmental stewardship through enhanced resource efficiency, sustainable infrastructure, robust environmental risk management and continued digitalisation, reinforcing its commitment to long-term value creation and positive environmental impact.
(Score 80 - Outstanding)
Northern Arc maintains a strong governance framework, reflected in ~95% Board attendance during FY26. ICRA ESG positively notes the presence of a dedicated Board-level ESG Committee, which oversees ESG strategy, environmental and social risk management, impact measurement and sustainable finance initiatives, while monitoring ESG performance and utilisation of proceeds from green and sustainability-linked funding.
Risk and compliance are embedded across operations, with environmental and social risk assessments integrated into lending decisions through the ESMS framework and proprietary Nimbus platform. Technology-led controls, including an automated AML monitoring system and a workflow-based compliance tracking system, further strengthen transaction monitoring, regulatory compliance and timely filings.
Northern Arc’s governance framework has also evolved alongside the participation of reputed development finance institutions and impact investors, including IFC, FMO, British International Investment (formerly CDC Group) and LeapFrog Investments, which have a strong focus on responsible finance, developmental impact and robust ESG practices.
Overall, strong Board oversight, technology-enabled risk and compliance systems, transparent disclosures and institutional governance practices provide a robust foundation for NACL’s responsible and sustainable growth.
Sustainability: Advancing for Planet, People, and Ethical Governance
As a mission-driven financial services platform, we seek to contribute to a more equitable future by embedding sustainability considerations into decision-making across the organisation. Sustainability informs our priorities and guides our responsibilities to shape a forward-looking approach to responsible finance.
Sustainability outcomes, awareness, and sensitivity are integral to how the Company operates, grows, and defines success. This approach is grounded in the recognition that finance can serve as a powerful catalyst for social, environmental, and institutional progress. Efforts span bridging credit gaps in underserved regions, mobilising climate-conscious investments, and avoiding exposure to activities with adverse environmental or social impact, alongside maintaining strong governance standards.
Sustainability is also embedded within our internal processes and systems. Investments are evaluated against applicable laws and globally recognised benchmarks, including the IFC Performance Standards, supported by structured environmental and social due diligence frameworks. Ongoing internal training initiatives are undertaken to strengthen ESG risk assessment, while policies are periodically reviewed to align with evolving international standards and best practices.
From bridging credit gaps in underserved regions to mobilising climate-smart investments and refraining from financing activities that negatively affect the environment & social well-being, and upholding rigorous governance standards, we lead by example in shaping the future contours of responsible finance and business conduct.