ECGC

Export Credit Guarantee Corporation

of IndiaPresented by

Rama Mittal Ruchi Gupta

What is ECGC?

• 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.

• To support the Indian Export Industry by providing cost-effective insurance and trade-related services to meet the growing needs of the Indian export market through the optimal utilization of available resources.

Mission

A Brief Profile of ECGC

• No. of offices No. of offices 5 Regional 5 Regional

offices offices and 51 Branches and 51 Branches

• Paid Up Capital Rs Paid Up Capital Rs

900 Cr900 Cr

• Reserves Rs Reserves Rs

913.42 Cr913.42 Cr

Data for 2007-08Data for 2007-08

• 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

ECGC – An Export Promotion Institution

• 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

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• Provides Overseas Investment Insurance to Indian companies investing in joint ventures abroad in the form of equity or loan

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How does ECGC help exporters?

• 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

How does ECGC help exporters?

• 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

Risks Covered by ECGC

RISKS

COUNTRY BUYER BANK

COMMERCIAL RISK POLITICAL RISK

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

Need for export credit insurance

• Risks even at the best of times • War or civil war may block or delay

payment • Insolvency of buyers

Policies & Products

Credit Insurance Policies

Policies offered to Exporters

• Standard Policy • Specific Shipment Policy• Export Turnover policy• Specific buyer wise policy• Consignment export policy• Customer specific policy

SCR or Standard Policy

• Shipments (Comprehensive Risks) Policy, commonly known as the Standard Policy, is the one ideally suited to cover risks in respect of goods exported on short-term credit, i.e. credit not exceeding 180 days.

• This policy covers both commercial and political risks from the date of shipment.

Percentage of risk coverage

ECGC normally pays 90% of the loss

Exporter has to bear remaining 10%

Specific Shipment Policy -

• Specific Shipment Policies - provide cover to Indian exporters against commercial and political risks involved in export of goods on short-term credit not exceeding 180 days.

• It is issued for a particular shipment sent to a particular buyer.

Percentage of Risk Coverage

• 80% paid by ECGC

• 20% born by Exporter

Service Policy

• Where Indian companies conclude contracts with foreign principals for providing them with technical or professional services, payments due under the contracts are open to risks similar to those under supply contracts. In order to give a measure of protection to such exporters of services, ECGC has introduced the Services Policy

Different types of Services Policy

• Specific Services Contract (Comprehensive Risks) Policy

• Specific Services Contract (Political Risks) Policy

• Whole-turnover Services (Comprehensive Risks) Policy

• Whole-turnover Services (Political Risks) Policy

Policies & Products

Special Schemes

Transfer Guarantee

• The confirming bank will suffer a loss if the foreign bank fails to reimburse it with the amount paid to the exporter.

• The Transfer Guarantee seeks to safeguard banks in India against losses arising out of such risks

Percentage of Risk Coverage

By ECGC• upto 90% if Loss due to political

risks • upto 75% if loss due to commercial

risks

By Bank• Remaining % in both risks

Overseas Investment Guarantee

• It is Given by ECGC for any investment made by way of equity capital or loan for the purpose of setting up or expansion of overseas projects.

• The investment may be either in cash or in the form of export of Indian capital goods and services.

Thanks