Prestige Institute of Management & Research

Presented By –Isha Joshi(BFT – IV sem)

What is ECGC

Government owned enterpriseProvides credit insurance facilities to exporters and banks in IndiaWorks under administrative control of Ministry of Commerce & IndustryManaged by a Board of Directors comprising representatives of the Government, Reserve Bank of India, banking , insurance and exporting community.

It has evolved various export credit risk insurance products to suit the requirements of Indian exporters and commercial banksThe seventh largest credit insurer of the worldEssentially an export promotion organizationSeeking to improve the competitive capacity of Indian exporters by giving them credit insurance covers comparable to those available to their competitors from most other countriesIt keeps its premium rates at the lowest level possible.

Functions of ECGCProvides a range of credit risk insurance covers to exporters against loss in export of goods and services Offers Export Credit Insurance covers to banks and financial institutions to enable exporters to obtain better facilities from themProvides Overseas Investment Insurance to Indian companies investing in joint ventures abroad in the form of equity or loan

How does ECGC helps Exporters

Offers insurance protection to exporters against payment risksProvides guidance in export-related activitiesMakes available information on different countries with it's own credit ratingsMakes it easy to obtain export finance from banks/financial institutionsAssists exporters in recovering bad debtsProvides information on credit-worthiness of overseas buyers

Vision & Mission

The vision of Export Credit Guarantee Corporation of India Ltd. Is to excel in providing export credit insurance and trade related services. The mission of ECGC is to support the Indian Export Industry by providing cost effective insurance and trade related services to meet the growing needs of Indian export market by optimal utilization of available resources.

Objectives of ECGC

To encourage and facilitate globalization of India’s tradeTo assist Indian exporters in managing their credit risks by providing timely information on worthiness of the buyers, bankers and the countries.To protect the Indian exporters against unforeseen losses which may arise due to failure of the buyer, bank or problems face by the country of the buyer by providing cost effecting credit insurance covers.

To facilitate availability of adequate bank finance to the Indian exporters by providing surety insurance covers for bankers at competitive ratesTo develop world class expertise in credit insurance among employees and ensure continuous innovation and achieve the highest customer satisfaction by delivering top quality servicesTo educate the customers by continuous publicity and effective marketing

Risks Covered

Risks Commercial Risks

L/C Opening Banks Risks

Political Risks

Political Risks

Import RestrictionsWar/ civil war/ RevolutionAdditional Freight or insurance chargesAny other cause attributable to importing country

Commercial Risks

Insolvency of the BuyerProtracted default of the BuyerBuyer’s failure to accept the goods

L/C Opening Bank’s Risks

Insolvency of the L/C opening BankFailure of the L/C opening Bank to make payment due within a specified periodNon – payment or non – acceptance due to discrepancies in the L/C

Risks not Covered

Risks of loss due to commercial or quality disputes Insolvency or default of any agent of the exporter or of the collecting bank Loss or damage to the goods which can be covered by general insurers Exchange Rate Fluctuation Failure of the exporter to fulfil the terms of thecontract or negligence on his part

ECGC Policies

PoliciesExport Credit Insurance for

Exporters

Export Credit Insurance for Banks

Special Schemes

Export Credit Insurance for Exporters

Short Term Medium and Long Term

Shipments Comprehensive Risk Policy

Small Exporters Policy Shipments Policy Services Policy Export Turnover Policy Export Specific Buyer Policy Consignments Export Policy IT – Enabled Services Policy

Construction Work Policy

Letter of Credit Confirmation Cover

Specific Policy for Supply Contract

Specific Shipment Policy

Specific Services Policy

Export Credit Insurance to Banks

Packing Credit Guarantee Export Production Finance Guarantee Post – Shipment Credit Guarantee Export Performance Guarantee Export Finance (Overseas Lending)

Guarantee

Special Schemes

Buyer’s Credit Covers Line of Credit Cover Overseas Investment Insurance

Some of the Main Policies

Contract PolicyShipment PolicyConstructions Work PolicyServices PolicyOverseas Investment Insurance

Contract Policy

Exporters that have secured contract for Turnkey Projects, EPC contract or any other contract which involves supplies of capital goods and services for commissioning of the projectThe cover provides protection against non – receipt of payments due to commercial and/or political risksRisks Covered – Political, Legal and L/C opening bank risksLoss Coverage – 90%

Obligations –

Obtain indicative premium rate at bid stage. Seek cover after payment of premium. Advise progress of project in accordance with PEM

guidelines. Declaration of overdue payments. Filing of claim within 12 months from due date. Sharing of recovery.

Highlights –

Cover can be either for Political or Comprehensive Risks

Pre shipment risk cover can also be obtained Premium in instalments Reduced premium for projects funded by Multi-lateral

agencies

Shipment Policy

Exporters that have secured contract for supply of capital goods such as machinery or equipments on deferred terms of paymentThe cover provides protection against non –receipt of payments due to commercial and/or political risks

Risks Covered – Political, Legal and L/C opening bank risks

Loss Coverage – 90%

Obligations and Highlights are the same as mentioned in the previous slides

Services Policy

Covers contracts under which only services are to be providedThe cover offers protection to the Indian exporters against payment risks involved in rendering services to the foreign buyersA wide range of services like technical or professional, hiring or leasing can be covered under these policies

Risks Covered – Political, Legal and L/C opening bank risks

Loss Coverage – 90%

Obligations and Highlights are the same as mentioned in the previous slides

Construction Works Policy

It is designed to provide cover to an Indian contractor who executes a civil construction job abroadThe cover provides protection against non-receipt of payments due to commercial and/or political risks

Risks Covered – Political and Legal Risks

Loss Coverage – 85%

Obligations and Highlights are the same as mentioned in the previous slides

Overseas Investment Insurance

Provides cover for the investments made by Indian investor abroad in joint ventures or in their wholly owned subsidiary in the form of equity or untied loanThe basic principle is that the investment should emanate from India and benefit of dividend/interest there from should accrue to IndiaThe cover provides protection against non-receipt of receivables due to specified political risks.

Political Risks Covered –

War, Civil War, Revolutions in buyer’s country Expropriation Restrictions on remittances

Loss Coverage – 90%

Obligations are same as mentioned in the previous slides

Highlights –

• Cover for Political Risks only.• Investments in form of cash or through export of goods and services.• Cover available up to 15 years• Extendable up to 20 years with reduced insured amount.• Reduced loss coverage with proportionate reduction in premium.