Non-banking financial company (NBFC) Northern Arc Capital has raised Rs 200 crore from the Dutch development bank FMO through an issuance of rupee-denominated non-convertible debentures (NCDs).
The NCDs, issued in two tranches of Rs 100 crore each, are rated A+ by ICRA.
One tranche has been structured as a “green bond” and will be utilised exclusively for green purposes on lending. “This is the first ever green bond issued in the Indian impact investing space.
Northern Arc Capital will dedicate the Rs 100 crore tranche to fund NBFCs that in turn finance the purchase of solar lamps, clean cooking stoves, electric and cleaner fuel vehicles, and for the financing of water and sanitation loans,” the NBFC said.
This transaction marks an important milestone in opening up the green bond market to smaller, non-bank issuers. Significantly, this will also encourage lending by NBFC-MFIs (micro-finance institutions), NBFC-affordable housing finance companies and housing finance companies for green end uses.
Northern Arc and FMO closely engaged to structure an instrument that will enable green financing to retail borrowers, with the aim of catalysing this sector and encouraging the purchase and installation of assets that are beneficial to the environment.
Reference- Times Of India