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Northern Arc Capital Launches Machine Learning-Based Underwriting Solution

‘Nu Score’ will offer real-time, data-backed risk assessment for evaluating a borrower

Northern Arc Capital Launches Machine Learning-Based Underwriting Solution
Nu Score aims to provides a credit score along with loan quantum and pricing recommendation
POSTED ON January 12, 2023 2:35 PM

The financial services company, Northern Arc Capital, has launched a credit scoring solution, Nu Score. It is a machine learning-based solution that will offer microfinance companies and other lenders seamless and real-time digital decisioning support for underwriting at the point of sale.

Nu Score helps financial institutions use the data collected by them to quantify risk and price it accurately. It provides a credit score along with loan quantum and pricing recommendation, with a summary of the key factors impacting the score for a customer. 

It is reportedly developed on Northern Arc’s data repository of 25 million loans spanning over a decade. This includes data points from across the country and over different economic and credit cycles, including macro shocks and regional events like natural disasters. 

“Nu Score will form an integral part of our enterprise solution that will help originators optimize risk, reduce turn-around-time and serve clients better. It will enable them to scale their portfolio quickly and build a high-quality book," said Ashish Mehrotra, chief executive officer (CEO) and managing director (MD), Northern Arc Capital.

"Digital tools and intervention can speed up the access for the micro enterprises (MEs) and increase the flow of credit. Small Industries Development Bank of India (SIDBI) is undertaking formalisation project shortly which will also facilitate registration of informal micro enterprise on the Udyam platform and credit to this important segment of the economy," added S. Ramann, chairman and managing director (CMD), SIDBI

Credit scores based on alternate data can play a role in increasing the flow of credit to micro-enterprises. ‘Nu Score’ can facilitate the lending of microfinance institutions (MFIs) or non-banking financial institutions (NBFCs) to micro-enterprises. Such scores can empower financial institutions to optimise risk and cater to the under-served segments in an efficient manner, said Northern Arc Capital.

“Data-driven tools such as Risk Scorecards can be beneficial in helping MFIs quantify and price risk and scale up their portfolio,” said Dr Alok Misra, chief executive officer (CEO) and director of Microfinance Institutions Network (MFIN). 

Northern Arc is a financial services platform that provides credit to micro, small and medium enterprises (MSMEs), households, financial institutions and emerging businesses. Through technology and data, it provides a set of solutions to cater to the credit requirements of emerging segments and small businesses.

The company reportedly manages total assets under management (AUM) of over Rs 10,000 crore and has disbursed a total of over 8 million loans to retail customers across individuals, households, and small businesses.

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