Our Approach

Unleashing opportunities from a different vantage point.

From our vantage point, we have the ability to straddle opportunities in credit, investment banking and fund management. We understand the needs of our investors as well as the needs of our clients. Through a combination of our capital, products and partnerships, we connect millions of borrowers to mainstream debt investors. Our rigorous credit underwriting approach and our in-depth understanding of capital markets allows us to offer efficient debt solutions for client partners and attractive risk-return opportunities for debt investors.


Retail Lending Through Partnerships

We serve our retail borrowers through a tech and data analytics-based lending platform. Backed by a strong understanding of retail lending processes and the performance of retail loans, we initiated our Retail Lending Partnerships in Fiscal 2016.

We were one of the first NBFCs to implement such a model. Over the last five years we have been able to achieve seamlesstechnology integrations with our Retail Lending Partners. This integration spans across major business processes like sourcing, underwriting, disbursements, collections and customer servicing. The digital integration ensures a seamless flow of customer data at the time of customer onboarding, which is processed using automated credit decisioning for small ticket size loans and is supported by a team of credit managers for larger ticket sizes.


As of March 31, 2021, our platform had disbursed more than 2.50 million loans amounting to over Rs. 17,500 million.

As of March 31, 2021, our financing offerings through this vertical comprises of microfinance loans, MSME finance loans, vehicle finance loans and consumer finance loans with ticket sizes ranging from Rs. 10,000 to Rs. 50 lakhs.

The underwriting of these loans is heavily supported by our analytical models which are increasingly built using machine learning techniques. These underwriting models are recalibrated periodically by incorporating more variables and features as we disburse more loans and collect more data.

In order to lend to this borrower segment, we partner with multiple categories of Retail Lending Partners (i.e. financial institutions, technology platforms such as fintechs, and business correspondents) who provide us with necessary support in various functions such as loan origination, execution of loan documents, collections, etc. Further, if the Retail Lending Partners is a financial institution, such Partner may also assume a percentage of the credit exposure to the retail borrowers along with our Company.

We provide loansusing a straight through processing (STP) approachimplemented in select Retail Lending Patnerships for consumer loans and microfinance loans. Under this approach, the entire process of customer origination through disbursement cam be completed within one minute.

  • Sourcing: We have developed standard API modules for each asset class which fetches loan related data, information, and all relevant documents in real time from partners’ portal.
  • Data Processing: Once data is fetched into Nimbus, de-duplication, data & image processing and verifications are done by the system through an automated process and results are displayed in real time.
  • Loan Sanctioning: We have developed customized workflows for each asset class/products on the back of Business Rule Engine that governs the Straight Though Process (STP) and still maintains highest level of credit and risk control.
  • Loan Disbursement and Booking: Post Loan sanctioning, disbursement is initiated which enables us to fund end customers’ account in real-time. Loans are created and then loan booking files are generated by Nimbus as an auto trigger.
  • Loan Repayment: Collection APIs enable real-time collection feed to Nimbus from the partner portal.

Through Nimbus and integration with our Retail Lending Partners, we are able to serve our customer 24X7 currently with more than 400,000 successful transactions done on a monthly basis. The platform is capable of handling more than one million loans on a monthly basis which allows us to pursue our growth plans.

We have designed key risk mitigation measures for our partnership-driven retail business:

  • Our Retail Lending Partners take responsibility for any service deficiency and related losses on the portfolio;
  • Our Partners provide a First-Loss Default Guarantee (“FLDG”). If the Retail Lending Partner is a financial institution, they may assume “skin-in-the-game” by co-lending, typically to the extent of 20% of the loan amount;
  • Typically, we ensure direct collection of sums owed from the borrower either by way of the NACH mandates being registered in our favour which enables us to update the account into which instalments or repayment amounts are deposited, and
  • All collections and repayments of loans are placed in an escrow account in the case of Co-lending Partnerships. For loans originated through Retail Lending Partners that are not Co-lending Partners, collections are routed to Northern Arc designated collection accounts through multiple ways including NACH, UPI, account debit, etc.
  • Retaining the right to replace the loan-servicer in the event the Retail Lending Partner is unable to undertake collections satisfactorily. We have also on-boarded collection agencies and tele-calling service providers to assist us in undertaking collection activities including loan utilization, field-level collections and legal proceedings.

On-boarding Retail Lending Partners:

Most of our Retail Lending Partners in the financial institution category were existing clients of our Company. We carefully evaluate the suitability and capability of the Retail Lending Partner while on-boarding them for our retail lending business. We identify potential Retail Lending Partners by participation in industry meets and seminars, networking with industry influencers, through private equity funds, referrals and incoming enquiries.

If a potential Retail Lending Partneris not already a client of Northern Arc, our business team carries out a pre-DD assessment and if this establishes the preliminary feasibility of partnering with that entity, a detailed diligence is conducted. In addition to governance, management information systems and operational and financial performance, the diligence exercise puts great emphasis on integration of the technology platform of the potential Originator Partner with Nimbus, given that the business is designed to be a low-touch operation, i.e., through automated systems. Upon completion of the diligence, a DD report is presented to the CC and includes a recommendation on the proposed product, credit policy, operating framework and the FLDG that we should procure from the Originator Partner for loans originated under the said partnership.