Arthan Finance, a prominent non-banking financial company (NBFC) focused on empowering micro, small, and medium enterprises (MSMEs) in India, has successfully raised Rs 50 crore in equity funding. This recent funding round marks a significant milestone for the company, poised to enhance its financial capabilities and expand its reach within the MSME sector.
Strategic Investors and Their Impact
The equity funding was secured from a consortium of investors, reflecting strong confidence in Arthan Finance’s business model and growth potential. This consortium includes marquee investors like Caspian Debt, which has a track record of supporting impactful enterprises, and other undisclosed private investors. The infusion of capital will enable Arthan Finance to bolster its loan book, enhance its digital infrastructure, and expand its product offerings tailored to the unique needs of MSMEs.
Addressing the Credit Gap in MSMEs
The MSME sector in India faces a substantial credit gap, with many enterprises struggling to access traditional financial services. According to a report by Avendus Capital, only 14% of the 64 million MSMEs in India have access to formal credit. Arthan Finance aims to bridge this gap by providing customized financial solutions that cater to the underserved and unserved segments of this crucial sector.
Enhancing Digital and Operational Capabilities
A significant portion of the newly raised funds will be allocated towards enhancing Arthan Finance’s digital and operational capabilities. This includes investing in advanced technology platforms to streamline loan processing and improve customer experience. By leveraging digital tools, Arthan Finance plans to make credit more accessible to MSMEs, especially those in remote and underserved areas.
Expansion Plans and Future Outlook
With the fresh capital, Arthan Finance is set to embark on an ambitious expansion plan. The company intends to scale its operations across new geographies and introduce innovative financial products that cater to the evolving needs of MSMEs. This strategic expansion is expected to not only increase Arthan Finance’s market presence but also significantly contribute to the financial inclusion of small enterprises in India.
Comparisons with Other NBFCs
The funding landscape for NBFCs in India has been vibrant, with several companies raising substantial capital to support their growth. For instance, Northern Arc recently raised $80 million from the International Finance Corporation (IFC) to expand its reach to MSMEs. Similarly, CredRight, another NBFC focusing on the MSME sector, secured Rs 78 crore in a mix of equity and debt to fuel its growth and target an AUM of Rs 2,000 crore over the next three years. These developments indicate a robust interest and support from investors in the financial inclusion initiatives led by NBFCs.
Conclusion
Arthan Finance’s successful equity funding round underscores the increasing investor confidence in the potential of NBFCs to drive financial inclusion in India. By addressing the critical credit needs of MSMEs and enhancing its digital infrastructure, Arthan Finance is well-positioned to play a pivotal role in the economic growth and empowerment of small enterprises across the country.
Meet Suhas Harshe, a financial advisor committed to assisting people and businesses in confidently understanding and managing the complexities of the financial world. Suhas has shared his knowledge on various topics like business, investment strategies, optimizing taxes, and promoting financial well-being through articles in InvestmentDose.com
