Northern Arc’s ML analytical tool, NuScore to aid Pahal Financial Services’ underwriting
– Nu Score by Northern Arc is a bespoke machine learning-based analytical tool that aids financial institutions in their underwriting.
– Through API integration, Nu Score facilitates credit-decisioning by Pahal real-time and data-driven.
– With Nu Score, Pahal expects to expand their product offering and help disburse over INR 2,000 crore in FY 24 across a customer base of 6.5 lakh borrowers.
Northern Arc Capital, one of India’s leading diversified financial services companies today announced that its ML based analytical tool, Nu Score will aid underwriting and risk assessment of Gujarat-based NBFC-MFI, Pahal Financial Services. With Nu Score, Pahal will have access to a robust analytical and tech infrastructure for assessing its customers and expanding its product offerings.
Founded in 2011, Pahal began as an SME loan provider and pivoted to providing microfinance loans to women borrowers in rural areas under the joint-liability-group (JLG) model. Since 2016, the company has disbursed MFI loans to the tune of nearly INR 4,500 crore to over 10 lakh borrowers through its network of 270+ branches across 117 districts in the country. As of March 2023, the company has served 4.6 lakh active borrowers through a portfolio of INR 1,509 crore. With real-time inputs from Nu Score, Pahal expects to disburse INR 2,000 crore across a customer base of over 6.5 lakh borrowers in FY 24.
Talking about the partnership with Northern Arc and how they plan to deploy Nu Score, Ms. Purvi Bhavsar, Co-Founder & Managing Director of Pahal said, “Pahal endeavours to provide sustainable financial inclusion in rural and urban households at an affordable price. As we enter our next phase of growth, our aim is to be a tech enabled Microfinance service provider and the partnership with Northern Arc for Nu Score will greatly enable us to make more informed and scientific credit underwriting decisions
right from assessing the borrower, their credit history to the repayment capacity of the borrower; helping us manage and optimize risk while at the same time building a high-quality loan book.”
Ashish Mehrotra, CEO & MD, Northern Arc Capital said, “At Northern Arc, our DNA is entrenched in a spirit of innovation and customer centricity. Coupled with our expertise in technology and focus on deep data, it has helped us offer customized solutions to our clients that solve critical pain points. Nu Score is our proprietary ML based solution that will help strengthen our relationship with clients like Pahal, who will use it to optimize risk, enhance productivity, reduce TAT and scale their business. It fits in perfectly with our strategy of identifying and working with high quality institutions and offering them a wide bouquet of financial, tech and analytical products. We began working with Pahal more than a decade back, in FY12. Since then, we have facilitated them with an array of products across Balance Sheet financing, structured finance, guarantee structures and syndication.”
Launched in January 2023, Nu Score is a machine learning scoring model which is custom-built for each lending institution. Enabled through API integrations, the customized model generates a detailed borrower-level analytics report within seconds.
Nu score was developed from Northern Arc’s 14 years expertise in the credit underwriting space and its robust risk assessment framework which currently boasts a stellar asset quality with GNPA of 0.60%. Since development, Nu Score has powered the origination of 15 lakh loans for Northern Arc’s direct and indirect retail portfolio.
About Northern Arc:
Northern Arc is a diversified financial services platform that provides credit to MSMEs, households, financial institutions, and emerging businesses. Through technology and data, it provides a diverse set of solutions to cater to the credit requirements of emerging segments and small businesses. Its business model is diversified across offerings, sectors, products, geographies, and borrower segments.
By leveraging its deep data insights & scorecards, Northern Arc has cumulatively raised over INR One Trillion in funds for its clients since inception of its platform in 2009. It is backed by marquee equity investors like Sumitomo Mitsui Banking Corporation (the world’s fourteenth largest bank), LeapFrog, IIFL, Accion, Augusta Investments (known as Affirma Capital), Dvara Trust and Eight Roads (proprietary arm of Fidelity).
Along with its asset management subsidiary, the company manages a total AUM of over INR 11,000 crore including 9.5 million loans to retail customers across individuals, households, and small businesses. Through the AltiFi platform, it offers fixed income investments to affluent and retail investors. Its exposure is spread across 657 districts in 28 states and 7 Union Territories in India.
About Pahal Financial Services Pvt. Ltd
Pahal is a company registered with the Reserve Bank of India as a Non-Banking Financial Company that provides microfinance services to low-income households. Mr. Kartik Mehta and Ms. Purvi Bhavsar, ex-bankers with over 50 years of combined experience, founded the company in 2011. Based in Ahmedabad, it has 270+ branches with over 2,200 employees. Currently, Pahal serves over 4.6 lakh active clients, with total assets under management of over INR 1,500 crore.
