Role of ecgc
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The document provides information on various credit insurance products offered by ECGC (Export Credit Guarantee Corporation of India) to exporters and banks. It describes short-term and medium/long-term export credit insurance that protects against payment risks and lending risks. It also outlines domestic credit insurance, overseas investment insurance, and exchange fluctuation covers. Statistics on ECGC's growth over time and profiles of specific insurance policies are included.
Role of ecgc
- 1. A PRESENTATION ON THE CREDIT INSURANCE PRODUCTS
- 2. EXPORT CREDIT INSURANCE • Credit Insurance CoversCredit Insurance Covers to exporters against Credit Risk lossesto exporters against Credit Risk losses in export of goods & services both under Short term andin export of goods & services both under Short term and Medium and LTMedium and LT • CreditCredit Insurance coversInsurance covers to banks to protect them against risksto banks to protect them against risks of non payment by exporters both under Short term andof non payment by exporters both under Short term and Medium and LTMedium and LT • Domestic Credit InsuranceDomestic Credit Insurance covers tocovers to Exporters and Banks inExporters and Banks in respect of their local sales and working capital finance,respect of their local sales and working capital finance, respectivelyrespectively • Overseas Investment InsuranceOverseas Investment Insurance coverscovers to protect Indianto protect Indian Entrepreneurs investing in Overseas Ventures (Equity/Loans)Entrepreneurs investing in Overseas Ventures (Equity/Loans) against expropriation risksagainst expropriation risks • Exchange Fluctuation CoversExchange Fluctuation Covers to exporters to protect them into exporters to protect them in respect of their exchange losses under Medium and LT exportsrespect of their exchange losses under Medium and LT exports
- 3. ECGC – AN EXPORT PROMOTION INSTITUTION • Provides credit risk covers to Exporters against non payment risks of the overseas buyers / buyer’s country in respect of the exports made. • Provides credit Insurance covers to banks against lending risks of exporters • Assessment of buyers for the purpose of underwriting • Preparation of country reports • International experience to enhance Indian capabilities • An ISO organisation excelling in credit insurance services
- 4. A BRIEF PROFILE OF ECGC • No. of offices 5 Regional offices and 51 BranchesNo. of offices 5 Regional offices and 51 Branches ( Head office and all Branches ISO certified)( Head office and all Branches ISO certified) • Paid Up Capital Rs 900 CrPaid Up Capital Rs 900 Cr • Reserves Rs 913.42 CrReserves Rs 913.42 Cr • IRDA registered Insurance company classified under General Insurance-Specialised InstitutionIRDA registered Insurance company classified under General Insurance-Specialised Institution Data for 2007-08Data for 2007-08 • Premium Income Rs 668.36 CrPremium Income Rs 668.36 Cr • Claims paid Rs 419.74 CrClaims paid Rs 419.74 Cr • Recoveries Rs 161.50 CrRecoveries Rs 161.50 Cr • No. of Policies in force 12533No. of Policies in force 12533 • No. of shipments covered 364848No. of shipments covered 364848 • No. of buyers covered 46799No. of buyers covered 46799 • No. of countries covered 193No. of countries covered 193 • No. of banks holding covers 65No. of banks holding covers 65 • No. of bank branches covered 3709No. of bank branches covered 3709 • No. of exporters financed by banks 20568No. of exporters financed by banks 20568
- 5. STATISTICS Particulars Initial Years (1957-60) 2007-08 Premium Rs 43,109 (1957-58) Rs 668.36 crores Claims Rs 4.51 lacs (1960) Rs 419.74 crores Recoveries Rs 2.00 lacs (1960) Rs 161.50 crores Value of shipments covered Rs 1.30 crores(1957 -58) Rs 52766.57 crores Policies in Force 146 no. (1957-58) 12533 no. No. of banks covered under Guarantees 3 no. (1960) 65 No. of bank branches 3 no. 3709 no. Paid up Capital Rs 50.00 lacs Rs 900 crores
- 6. Payment Risk EXPORTEXPORT INSURANCEINSURANCE Goods Receivables Exchange Risk Loss or Damage Marine Insurance Hedging by Authorized Dealers CREDIT INSURANCE
- 7. LC RISKS POLITICAL RISK (Open Cover and Restricted cover ) COUNTRY BUYER BANK LC / NON – LC COMMERCIAL RISK RISKS COVERED BY ECGC
- 8. RISKS COVERED 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
- 9. PRODUCTS OFFERED TO EXPORTERS• 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)
- 10. SHIPMENTS ( COMPREHENSIVE RISKS) POLICY • Whole Turnover principle- all exports covered • Selective options for LC/Associates/Consignments • 90% cover • Advance Premium subject to Minimum premium of Rs.10,000/- • Policy Period - 2 years • Credit limit (Drawee wise) on all the buyers • Monthly declarations with premium due • Premium rates schedule issued with Policy • No claim Bonus – every year 5% subject to maximum of 50%
- 11. SMALL EXPORTERS POLICY • Export turnover not exceeding Rs.50 Lakhs per annum • Advance Premium subject to Minimum Premium Rs.2000/- • Policy Period - one year • Cover for Commercial risks 95% and Political risks 100% • No Claim bonus applicable • Quarterly Declarations • Premium payment as per standard premium schedule attached to Policy
- 12. EXPORT TURNOVER POLICY • Minimum anticipated Premium of Rs.10 Lakhs • Period of Policy- One year • Monthly or quarterly declaration as per exporter’s choice • Higher Discretionary Limit of drawee wise limits on buyers (uptoRs100 lakhs for DP and Rs50 lakhs for DA) • Premium rates discounted by 20% • Premium payable upfront or in Quarterly instalments based on anticipated exports • 5% cash discount for upfront payment of full annual premium
- 13. SPECIFIC SHIPMENT POLICY (SSP) • Covering one shipment or One contract • Processing fee of Rs.1000/- • 80% cover • Premium higher than standard premium rates • Upfront premium before issue of Policy • Commercial / Political risks and L/C comprehensive risks covered • Submission of Shipment Statement and realisation report later
- 14. SPECIFIC BUYER WISE POLICY • Covering One buyer / One Bank • Processing fee Rs.1000/- • Period of cover - One year • All shipments to buyer on Non LC terms or shipments under LC from bank covered • Quarterly/Annual premium payable upfront based on projected exports • 80% cover • Monthly or quarterly shipment statements • 5% No Claim Bonus reduction on renewal
- 15. BUYER EXPOSURE POLICY • Cover issued on exposure basis as opposed to turnover ( Exposure: Likely outstanding at any given point of time) • One time payment of premium on exposure • Single Premium rate based on country rating for Comprehensive risks/Political risks • Processing fee Rs.1000/- on application • Cover is up to Exposure or the Loss limit (Credit Limit) • Premium payable either quarterly or annually on the loss limit • No monthly statements • Annual statement of shipments at the end of Policy period on renewal • Coverage is 80% • Selective cover for each buyer at exporter’s discretion
- 16. MULTI BUYER EXPOSURE POLICY • Cover on exposure as opposed to turnover and cover for more than 1 buyer • Discretion to choose buyers for cover with exporter and shall be acceptable to ECGC • Processing Fee Rs.5000/- to accompany application • List of buyers to be given with proposal and any addition to be advised • Minimum 10% of projected turnover will be fixed as Aggregate Loss Limit (ALL) which will be the Maximum Liability • Exporter can opt for higher exposure than 10% of turnover • Cover for each buyer is 10% of ALL as Single Loss Limit (SLL) • Exporter to have access to ECGC website for checking defaulter buyer list. • Coverage is 80% and lower cover available with proportionate reduction of premium. Single premium rate irrespective of country grading • Upfront premium payable before issue or in quarterly instalments • 5% No Claim Bonus reduction on renewal
- 17. CONSIGNMENT (STOCK HOLDING AGENT) POLICY • Consignment exports covered under this exclusive cover for a period of 1 year • Premium on shipments to the agent payable on the turnover • Upfront premium quarterly / annually • Coverage 80%. Exporters holding Standard Policy will get 90% cover • One Agent / Multiple buyers • Cover on agent or on ultimate buyers as desired by exporter • Credit limits (Drawee wise limits) to be obtained on ultimate buyers • Discretionary Credit limit available upto 5% of turnover with max of Rs100 lakhs • Longer period of 360 days for realization of bills • Premium payable on the basis of country classification and tenor of 90/180/360 days. Extension upto 540 days permissible with additional premium • 5% No Claim Bonus reduction on renewal
- 18. CONSIGNMENT EXPORTS (GLOBAL ENTITY) POLICY • Coverage for selling goods through exporter’s own subsidiary or branch office during a period of 1 year • Premium on shipments to the GE payable on the turnover • Upfront premium quarterly / annually • Coverage 80%. Exporters holding Standard Policy will get 90% cover • One GE / Multiple buyers • Cover on GE or on ultimate buyers as desired by exporter • Commercial cover of Insolvency of GE only if Joint stock company and equity stake not exceeding 49%; Otherwise only Political risks cover • Credit limits (Drawee wise limits) to be obtained on ultimate buyers • Discretionary Credit limit available upto 5% of turnover with max of Rs100 lakhs • Longer period of 360 days for realization of bills • Premium payable on the basis of country classification and tenor of 90/180/360 days. Extension upto 540 days permissible with additional premium • 5% No Claim Bonus reduction on renewal
- 19. MSME POLICY • Policy issued for small exporters with Export Turnover not exceeding Rs10 Lakhs and registered under MSME Act, 2006 • Cover available upto Rs10 lakhs with annual premium of Rs 5,000 and a processing fee of Rs1,000 • Cover available will be 90% • Maximum claim payable is Rs3 lakhs on any buyer • No requirement of monthly declaration of shipments
- 20. EXPORT FACTORING SERVICES • Factoring services involving finance, credit protection, collection under one roof • Finance against export receivables facilitated through a bank • Credit protection available after assessment of buyers • Receivables financed without recourse • 80% prepayment against invoices and balance after 90 days from due date less charges, if payment not received • Details available on specific request at factoring@ecgc.in
- 21. EXPORT CREDIT INSURANCE COVERS TO BANKS • Covers for working capital granted by commercial banks to Exporters at Pre shipment and Post shipment stages • Covers available on exporter wise, bank branch wise and bank wise • Losses due to protracted default / Insolvency of exporters covered • Cover varies from 60% to 95% depending on the type of cover
- 22. EXPORT STIMULUS PACKAGE • Additional cover of 5%, subject to maximum protection of 95% available for all MSME exporters • All exporters of Textiles ( including handicrafts and handlooms), Gem & jewellery, leather, engineering goods, carpets, project goods, auto components and chemicals will also get the additional protection of 5% • Additional cover through the National Export Insurance Account of the GOI • Bank advances to MSME borrowers for exports will get an additional protection of 10% subject to maximum protection of 85% under the Credit Insurance covers to banks • Additional cover available for shipments /advances made/ granted during the period 1st Jan 09 to 30th June 09
Editor's Notes
- #8: We cover political risks on countries which have been divided into two groups . Group I are those countries under open cover category where political risks are automatically covered on submission of declaration and payment of premium and for restricted cover countries where prior approval for cover for political risks is mandatory for cover even on political risks to be available. Commercial risk cover is available on buyer for non- LC transactions and for Banks who have opened LCs.