Ecgc[1]
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The Export Credit Guarantee Corporation of India (ECGC) provides several types of insurance policies and guarantees to support Indian exporters. It was established in 1957 under the Ministry of Commerce to cover risks involved in exporting goods and services on credit. ECGC's main services include credit insurance that protects exporters against payment risks from international buyers, guarantees that enable exporters to obtain better financing from banks, and overseas investment insurance. The document then describes several types of credit insurance policies offered by ECGC, including standard policies, small exporters policies, specific shipment policies, buyer-specific policies, and buyer exposure policies that vary based on factors like policy period, risks covered, eligible exporters, and transactions covered.
![6/27/2013
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RISKS COVERED UNDER SSP (ST)
Politicalrisks: [For all the SSP-ST policies]
Restrictions by the Govt. of the buyer's country or
any statutory action which may block or delay the
transfer of payment made by the buyer;
War, civil war, revolution or civil disturbances in the
buyer's country;
New import restrictions or cancellation of a valid
import license;
Interruption of voyage outside India resulting in
payment of additional freight or insurance charges
which cannot be recovered from the buyer.
RISKS COVERED UNDER SSP (ST)
Insolvency & defaultof LC openingbank:
Insolvency of the L/C opening bank;
Failure of the LC opening bank to make
the payment due within a specified
period, normally four months, from the
due date.
RISKS NOT COVEREDUNDER SSP (ST)
Commercial disputes including quality disputes
raised by the buyer, unless the exporter obtains
a decree from a competent court of law in the
buyer's country in his favour;
Causes inherent in the nature of goods;
Buyer's failure to obtain necessary import or
exchange authorization from authorities in his
country;
RISKS NOT COVEREDUNDER SSP (ST)
Insolvency or default of any agent of the
exporter or of the collecting bank;
Loss or damage to goods;
Exchange rate fluctuation;
Failure of the exporter to fulfil the terms of the
export contract or negligence on his part;
Non-payment under a letter of credit due to any
discrepancy pointed out by the L/C opening
bank.
OBLIGATIONSOF EXPORTER HOLDING SSP (ST)
Submission of statement of shipments made
Submission of statement of overdue
Intimationof event affectingthe risk
Actionfor minimisingloss
No extension of due date (subject to ECGC terms)
Action to safeguard goods; resell them to alternate
buyer
bring the goods back to India, with the prior
approval of ECGC (and blacklist buyer).
EXPORT (SPECIFIC BUYERS) POLICY
Credit Insurance Policies](https://image.slidesharecdn.com/ecgc1-130903145045-/85/Ecgc-1-6-320.jpg)
Ecgc[1]
- 1. 6/27/2013 1 EXPORT CREDIT AND GUARANTEE CORPORATION OF INDIA LTD. (ECGC) ECGC Established in 1957 to cover risks of exporting on credit. Under administrative control of Ministry of Commerce & Industry, Dept. of Commerce, GoI. Credit risk insurance covers to exporters against loss in export of goods and services Guarantees to banks and financial institutions to enable exporters to obtain better facilities from them Overseas investment insurance to Indian companies investing in joint ventures abroad in the form of equity or loan. ECGC’S SERVICES TO EXPORTERS Insurance protection to exporters against payment risks Guidance in export-related activities 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 Information on credit-worthiness of overseas buyers CLASSES OF POLICIES ON OFFER Credit Insurance Policies Export Insurance Cover to Banks Full Fledged Factoring Special Schemes TYPES OF POLICIES CREDIT INSURANCE POLICIES SCR or Standard Policy Small Exporters Policy Specific Shipment Policy – Short Term (SSP- STI) Export (Specific Buyers)Policy Export Turnover Policy Buyer Exposure Policy Consignment Export Policy (stockholding agent)
- 2. 6/27/2013 2 CREDIT INSURANCE POLICIES Consignment Export Policy (global entity) Services Policies SoftwareExport Policy IT-enabled Services (specific customer) Policies ConstructionWorks Policy Specific Policyfor SupplyContracts InsuranceCover for Buyer’s Credit & Line of Credit SPECIAL SCHEMES Exchange Fluctuations Risk Cover Transfer Guarantee Overseas Investment Guarantee EXPORT INSURANCE COVER TO BANKS ECIB – PC ECIB – EPF ECIB – PS ECIB – EF ECIB – EP Export Finance (Overseas Lending) Guarantee STANDARD POLICY SCR OR STANDARD POLICY Provides cover only for the post-shipment risks. Exports on short-term credit, i.e. credit not exceeding 180 days. Covers both commercial and political risks from the date of shipment. Issued to exporters whose anticipated export turnover for the next 12 months is more than Rs.50 lacs. STANDARD POLICY:RISKS COVERED Commercial Risks: Insolvency of the buyer. Failure of the buyer to make the payment due within a specified period, normally four months from the due date. Buyer's failure to accept the goods, subject to certain conditions. Only if a credit limit is approved by ECGC on each buyer to whom shipments are made on credit terms.
- 3. 6/27/2013 3 STANDARD POLICY:RISKS COVERED PoliticalRisks Statutory restriction in the buyer's country or any Govt. action, blocking or delaying transfer of payment made by the buyer. War, civil war, revolution or civil disturbances in the buyer's country. New import restrictions or cancellation of a valid import license in the buyer's country. Interruption or diversion of voyage outside India resulting in payment of additional freight or insurance charges which can not be recovered from the buyer. Any other cause of loss occurring outside India not normally insured by general insurers, and beyond the control of both the exporter and the buyer. STD. POL.: REQUIREMENTS To cover all shipments made on credit terms during the period of 24 months after the issue of the policy. Exporter must offer for cover each and every shipment in the next 24 months on DP, DA or open delivery terms to all buyers (other than to his own associates). May exclude shipments made against advance payment or irrevocable LCs confirmed by banks in India STD. POL.: REQUIREMENTS (LC) Option: obtain cover for either political risks only or For comprehensive risks, i.e., all political risks and the risk of insolvency or default of the bank opening the irrevocable Letter of Credit. provides indemnity to the exporter to the extent of 25% of the gross invoice value if the LC opening bank refuses payment on the ground of discrepancies in LC, which are not clearly attributable to the exporter. Cover provided only if the exporter agrees to get all the shipments made against irrevocable LC covered under the policy. Cover will not be available for selected transactions STD. POL: RISKS NOT COVERED Commercial disputes including quality disputes raised by the buyer, unless the exporter obtains a decree from a competent court of law in the buyer's country in his favour. Causes inherent in the nature of the goods. Buyer's failure to obtain necessary import or exchange authorization from authorities in his country. STD. POL.: RISKS NOT COVERED Insolvency or default of any agent of the exporter or of the collecting bank. Loss or damage to goods which can be covered by general insurers. Exchange rate fluctuation. Failure or negligence on the part of the exporter to fulfil the terms of the export contract. SMALL AND MEDIUM EXPORTERS POLICY
- 4. 6/27/2013 4 SMALL AND MEDIUM EXPORTERS POLICY For exporters engaged in manufacturing activities having invested in plant and machinery or engaged in export of services having invested in equipment as per MSMED Act, 2006 Not meant for the exporters carrying out only trade activities. FEATURES AT A GLANCE Particulars Details 1. Policy period 12 months 2. Processing Fees Rs.1000 3. Credit limit fees No 4. Discretionary Limit No 5. Declarations No 6. Premium Rs.5,000 7. Maximum Loss Limit Rs.10.0 lacs 8. Single Loss Limit Rs. 3.0 lacs 9. Report of overdue 60 days from the due date 10. Waiting period Two months from the due date 11. Percentage of cover 90% SPECIAL SCHEMES Exchange Fluctuation Risk Cover EXCHANGEFLUCTUATION RISK COVER Protection to exporters of capital goods, civil engineering contractors and consultants who have often to receive payments over a period of years for their exports, construction works or services. Since forward exchange market does not provide cover for such deferred payments. EXCHANGEFLUCTUATION RISK COVER Availablefor payments scheduled over a period of 12 months or more, Up to a maximum of 15 years. Cover can be obtained from the date of bidding right up to the final instalment. At the stage of bidding, an exporter/contractor can obtain Exchange Fluctuation Risk (Bid) Cover. Provided initially for a period of twelve months, extended if necessary EXCHANGEFLUCTUATION RISK COVER If the bid is successful, the exporter/contractor is required to obtain Exchange Fluctuation (Contract) cover for all payments due under the contract. If the bid is unsuccessful 75 percent of the premium paid by the exporter/contractor is refunded to him. Contracts coming under buyer's credit and line of credit are also eligible for cover under the schemes.
- 5. 6/27/2013 5 CREDIT INSURANCE POLICIES SpecificShipment Policy - Short Term(SSP-ST) SPECIFIC SHIPMENT POLICY - SHORT TERM (SSP-ST) Against commercial and political risks involved in export of goods on short-term credit not exceeding 180 days. These policies can be availed of by exporters who do not hold SCR Policy and by exporters having SCR Policy, in respect of shipments permitted to be excluded from the perview of the SCR Policy. Max. 80% of the gross invoice value of the shipments covered. SPECIFIC SHIPMENT POLICY - SHORT TERM (SSP-ST) For either a shipment or a few shipments to a buyer under a contract. Exporter can opt to cover one or more shipments under a particular contract. He can also choose to cover shipments made during a given period within the validity of the contract. PERIOD OF VALIDITY If shipments to be made during a particular period, the policy would be issued for that period. If policy is issued to cover a shipment already made before the proposal is submitted, the policy would be valid only for that shipment. If the proposal is to cover the shipment already made under a contract and to cover further shipments to be made under the same contract, the policy shall be issued for the period from the date of the shipment already made up to the period of contract or the period as desired by the exporter, whichever is earlier. DIFFERENT TYPES OF SSP (ST) : Specific Shipments (commercial and political risks) Policy - short-term. Specific Shipments (political risks) Policy - short-term. Specific Shipments (insolvency & default of L/C opening bank and political risks) Policy - short-term. RISKS COVERED UNDER SSP (ST) Commercial risks: Insolvency of the buyer. Failure of the buyer to make the payment due within a specified period, normally four months from the due date. Buyer's failure to accept the goods (subject to certain conditions).
- 6. 6/27/2013 6 RISKS COVERED UNDER SSP (ST) Politicalrisks: [For all the SSP-ST policies] Restrictions by the Govt. of the buyer's country or any statutory action which may block or delay the transfer of payment made by the buyer; War, civil war, revolution or civil disturbances in the buyer's country; New import restrictions or cancellation of a valid import license; Interruption of voyage outside India resulting in payment of additional freight or insurance charges which cannot be recovered from the buyer. RISKS COVERED UNDER SSP (ST) Insolvency & defaultof LC openingbank: Insolvency of the L/C opening bank; Failure of the LC opening bank to make the payment due within a specified period, normally four months, from the due date. RISKS NOT COVEREDUNDER SSP (ST) Commercial disputes including quality disputes raised by the buyer, unless the exporter obtains a decree from a competent court of law in the buyer's country in his favour; Causes inherent in the nature of goods; Buyer's failure to obtain necessary import or exchange authorization from authorities in his country; RISKS NOT COVEREDUNDER SSP (ST) Insolvency or default of any agent of the exporter or of the collecting bank; Loss or damage to goods; Exchange rate fluctuation; Failure of the exporter to fulfil the terms of the export contract or negligence on his part; Non-payment under a letter of credit due to any discrepancy pointed out by the L/C opening bank. OBLIGATIONSOF EXPORTER HOLDING SSP (ST) Submission of statement of shipments made Submission of statement of overdue Intimationof event affectingthe risk Actionfor minimisingloss No extension of due date (subject to ECGC terms) Action to safeguard goods; resell them to alternate buyer bring the goods back to India, with the prior approval of ECGC (and blacklist buyer). EXPORT (SPECIFIC BUYERS) POLICY Credit Insurance Policies
- 7. 6/27/2013 7 EXPORT (SPECIFIC BUYERS) POLICY Buyer-wise Policies - Short Term (BP-ST) Provide cover against commercial and political risks on export on short-term credit to a particular buyer. All shipments to the buyer in respect of whom the policy is issued will have to be covered (with a provision to permit exclusion of shipments under LC). These policies can be availed of by exporters who do not hold SCR Policy and by exporters having SCR Policy, in case all the shipments to the buyer in question have been permitted to be excluded from the purview of the SCR Policy. EXPORT (SPECIFIC BUYERS) POLICY The different types of BP (ST)? Buyer-wise (commercial and political risks) Policy - short-term Buyer-wise (political risks) Policy - short-term. Buyer-wise (insolvency & default of L/C opening bank and political risks) Policy - short-term. EXPORT (SPECIFIC BUYERS) POLICY Risks covered under BP (ST) Insolvency of the buyer Failure of the buyer to make the payment due within a specified period, normally four months from the due date. Buyer's failure to accept the goods (subject to certain conditions). EXPORT (SPECIFIC BUYERS) POLICY Political risks: Imposition of restrictions by the Government of the buyer's country or any Government action which may block or delay the transfer of payment made by the buyer; War, civil war, revolution or civil disturbances in the buyer's country; New import restrictions or cancellation of a valid import license; Interruption of voyage outside India resulting in payment of additional freight or insurance charges which cannot be recovered from the buyer; EXPORT (SPECIFIC BUYERS) POLICY Insolvency& default of LC opening bank Insolvency of the L/C opening bank; Failure of the LC opening bank to make the payment due within a specified period, normally four months from the due date; EXPORT (SPECIFIC BUYERS) POLICY Risksnot covered under BP (ST) Commercial disputes including quality disputes raised by the buyer, unless the exporter obtains a decree from a competent court of law in the buyer's country in his favour; Causes inherent in the nature of goods; Buyer's failure to obtain necessary import or exchange authorization from authorities in his country; Loss or damage to goods; Exchange rate fluctuation; Failure of the exporter to fulfil the terms of the export contract or negligence on his part.
- 8. 6/27/2013 8 BUYER EXPOSURE POLICIES Credit Insurance Policies BUYER EXPOSURE POLICIES Two types of exposure policies are offered, viz, Exposure (Single Buyer) Policy – for covering the risks on a specified buyer and Exposure (Multi Buyer) Policy – for covering the risks on all buyers. EXPOSURE (SINGLE BUYER) POLICY Cover provided on a selected buyer. Against commercial and political risks attached to the buyer For both non-LC and LC transactions. A separate Buyer Exposure Policy for each buyer covering all the exports to be made to the buyer during a period of twelve months. If covered for commercial and political risks, failure of the LC opening bank in respect of exports against LC will also be covered, SPECIALFEATURESOF EXPOSURE (MULTI– BUYER)POLICY Cover for an Aggregate Loss Limit (ALL) on all buyers Issued for a period of one year Available for exports to the buyers in countries listed under open cover category Prior application and approval required End of overview of ECGC’s services to exporters.