Chennai: Northern Arc Capital, one of India’s leading diversified financial services companies, today announced that its ML-based analytical tool, Nu Score, will aid the 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 a 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 and 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 of 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 of expertise in the credit underwriting space and its robust risk assessment framework, which currently boasts a stellar asset quality with a GNPA of 0.60%. Since its development, Nu Score has powered the origination of 15 lakh loans for Northern Arc’s direct and indirect retail portfolio.