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The Export Credit Guarantee Corporation of India was established in 1957 by the Government of India to promote exports by providing credit insurance. It is managed by a board representing government, RBI, banks, insurers and exporters. ECGC provides various types of credit risk insurance to exporters against losses from political and commercial risks, and facilitates their access to export financing.
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- 1. Export Credit Guarantee Corporation of India Limited, was established in the year 1957 by the Government of India to strengthen the export promotion drive by covering the risk of exporting on credit. Being essentially an export promotion organization, it functions under the administrative control of the Ministry of Commerce & Industry, Department of Commerce, Government of India. It is managed by a Board of Directors comprising representatives of the Government, Reserve Bank of India, banking, insurance and exporting community. ECGC is the fifth largest credit insurer of the world in terms of coverage of national exports. The present paid-up capital of the company is Rs.800 crores and authorized capital Rs.1000 crores.
- 2. Provides a range of credit risk insurance covers to exporters against loss in export of goods and services Offers guarantees to banks and financial institutions to enable exporters to obtain better facilities from them Provides Overseas Investment Insurance to Indian companies investing in joint ventures abroad in the form of equity or loan
- 3. Offers insurance protection to exporters against payment risks Provides guidance in export-related activities Makes available information on different countries with its own credit ratings Makes it easy to obtain export finance from banks/financial institutions Assists exporters in recovering bad debts Provides information on credit-worthiness of overseas buyers
- 4. Payments for exports are open to risks even at the best of times. The risks have assumed large proportions today due to the far-reaching political and economic changes that are sweeping the world. An outbreak of war or civil war may block or delay payment for goods exported. A coup or an insurrection may also bring about the same result. Economic difficulties or balance of payment problems may lead a country to impose restrictions on either import of certain goods or on transfer of payments for goods imported. In addition,
- 5. The exporters have to face commercial risks of insolvency or protracted default of buyers. The commercial risks of a foreign buyer going bankrupt or losing his capacity to pay are aggravated due to the political and economic uncertainties. Export credit insurance is designed to protect exporters from the consequences of the payment risks, both political and commercial, and to enable them to expand their overseas business without fear of lose.
- 6. RISKS POLITICAL RISK (Open Cover COMMERCIAL RISK and Restricted cover ) BUYER BANK COUNTRY LC / NON – LC LC
- 7. COMMERCIAL RISKS Insolvency of buyer/LC opening bank Protracted Default of buyer Repudiation by buyer POLITICAL RISKS War/civil war/revolutions Import restrictions Exchange transfer delay/embargo Any other cause attributable to importing country
- 8. Standard Policy Small Exporters policy Specific Shipment Policy (short term) Export Turnover policy Specific buyer wise policy Consignment export policy Global entity policy Single buyer exposure policy Multi buyer exposure policy Software project exports policy IT enabled (single customer) policy IT enabled (multi customer) policy SME Policy Customer specific policy (Tailor made)
- 9. EXPORT CREDIT INSURANCE PACKING CREDIT EXPORT CREDIT INSURANCE-EXPORT PRODUCTION FINANCE EXPORT CREDIT INSURANCE-INDIVIDUAL POST – SHIPMENT EXPORT CREDIT INSURANCE-EXPORT PERFORMANCE EXPORT CREDIT INSURANCE-EXPORT FINANCE
- 10. EXPORT CREDIT INSURANCE PACKING CREDIT A bank or a financial institution authorized to deal in foreign exchange can obtain the Individual Packing Credit Cover for each of its exporter clients who has been classified as a standard asset and whose C,R is acceptable to ECGC, Period of cover -12 months, Eligible Advance – RBI Guideline, Protection Offered - Against losses that may be incurred in extending packing credit advances due to protracted default or insolvency of the exporter-client. Obligation of Bank - Monthly declaration of advances granted and payment of premium before 10th of the succeeding month. Approval of the Corporation for extension of due date beyond 360 days from due date to be obtained. Default to be reported within 4 months from due date or extended due date of advances, if not recovered, filing of claim within 6 months of the Report of Default. Recovery action after payment of claim and sharing of recovery.
- 11. EXPORT CREDIT INSURANCE-EXPORT PRODUCTION FINANCE Any bank or financial institution authorized to deal in foreign exchange can obtain the Export Production Finance Cover for each of its exporter clients who has been classified as a standard asset and whose CR is acceptable to ECGC. Eligible Advance - Advances granted at pre-shipment stage over and above FOB value. Protection Offered - Against losses that may be incurred in extending packing credit advances to the full extent of cost of production due to protracted default or insolvency of the exporter-client.
- 12. EXPORT CREDIT INSURANCE-INDIVIDUAL POST –SHIPMENT Any bank or financial institution who is an authorized dealer in foreign exchange can obtain the Individual Post-shipment Export Credit Cover in respect of each of its exporter-clients who is holding the Standard Policy of ECGC WITHOUT any exclusion. Eligible Advance - All post-shipment advances given through purchase, negotiation or discount of export bills or advances against bills sent on collection. Protection Offered - Against losses that may be incurred in extending post-shipment advances due to protracted default or insolvency of the exporter-client.
- 13. EXPORT CREDIT INSURANCE-EXPORT PERFORMANCE banks holding ECGC Whole-turnover Packing Credit Cover (ECIB- WTPC), cover under EP shall be considered for all their standard accounts irrespective of credit ratings. In respect of other banks, it shall be only for standard accounts with acceptable credit ratings. Period of cover depend on bank guarantee. Eligible cover - Bank guarantee issued in support of export obligations to EPCs, CBs, STC, MMTC or recognized Export Houses, Bid Bond, Performance Bond, Customs, Central Excise and Sales Tax Authorities, L/Cs opened for purchase/import of raw materials in respect of export transactions.
- 14. Protection Offered - Against losses that the bank may suffer on account of bank guarantees given by it on behalf of exporters and due to protracted default or insolvency of the exporter-client Obligation of the bank - Premium is payable in advance. Approval of the Corporation for any extension in the period of the bank guarantee to be obtained. If the exporter fails to meet the payment as and when the guarantee is invoked or when it falls due under L/C, necessary steps to be taken for recoveries, including recall of advances and institution of legal proceedings. Default to be reported within 4 months from due date or extended due date of advances, if not recovered, filing of claim within 6 months of the Report of Default. Recovery action after payment of claim and the subsequent sharing of recovery.
- 15. EXPORT CREDIT INSURANCE-EXPORT FINANCE Any bank authorized to deal in foreign exchange can obtain the Export Finance Cover in respect of its exporter-client who has been classified as a standard asset and whose CR is acceptable to ECGC. Eligible Advance - Advances against incentives such as cash assistance, duty drawback, etc., receivable at post-shipment stage Protection Offered - Against losses that may be incurred in extending post- shipment advances against incentives due to protracted default or insolvency of the exporter-client.