Indian financial services platform Northern Arc group has signed an agreement to buy the microcredit business of S.M.I.L.E. Microfinance.
The financial value of the deal, which will be carried out through a slump sale, was not disclosed.
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Under the agreement, Northern Arc, a non-banking financial company (NBFC), will acquire the microfinance portfolio of S.M.I.L.E.
The deal is aimed at bolstering Northern Arc’s rural finance business, where it is looking to offer small loans digitally to the next billion customers.
It also brings S.M.I.L.E.’s network of 150 branches catering to over 400,000 customers along with its team of 850, who will join Northern Arc upon completion, which is subject to regulatory approval.
Northern Arc said it will adopt a data-driven approach for its business to underwrite loans and use predictive models to enhance portfolio quality.
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By GlobalDataNorthern Arc MD and CEO Kshama Fernandes said: “The acquisition is a critical step in the strategic direction that we wish to pursue. We will leverage our existing capabilities across sector expertise, technology and data to build a high-quality business that focuses on customer-centricity and best-in-class processes.
“S.M.I.L.E. is one of the pioneers of the microfinance sector in south India and we intend to take advantage of their rural penetration and long-standing customer relationships to build and scale this business quickly.”
