ECGC
OBJECTIVE of ECGC
To PROMOTE EXPORTS Mainly by Protecting Exporters against COMMERCIAL &
POLITICAL RISKS in realising export proceeds
Protecting Banks against RISK OF DEFAULT in export credit
Protecting Investors against POLITICAL RISKS in Shareholders’ equity and loan In
overseas investments
ECGC details:
Established in 1957
Fully owned by GOI
Under administrative control of MOCI
Capital Base
Highest ICRA rating of IAAA
5 Regional Offices and 51 Branch Offices
All Branches ISO 9001:2000 certified
Member of Berne Union
MOU with GOI
Key Performance Highlights
What is Risk?
Uncertainty about future outcome due to :
Unexpected occurrence of events
Uncontrollable factors
Lack of Information
Risk Perceptions
What is Credit Risk
Definition: The potential that a debtor will fail to meet its payment obligations in
accordance with agreed terms.
Export credit risk:
a) Buyer related problems
b) Country related
Risk Management
Analysis, acceptance or mitigation
Risk avoidance
Risk Transfer
Risk Sharing
Risk retention
Payment Risks
Role of ECGC as an Export Credit Insurer
Providing export credit insurance covers to Exporters against loss in export of goods &
services under ST & MLT (POLICY Scheme)
Providing export credit insurance covers to Banks & FI’s to enable exporters obtain
better facilities from them (ECIB) (formerly known as Guarantees)
Role of ECGC as an Export Credit Insurer
Providing cover for Buyers Credit/ Line of Credit to Banks/ FIs
Providing Overseas Investment Insurance to - Indian Investors in Overseas Ventures
(Equity/Loans)
Risks covered -
Political
Commercial
Credit
Risks NOT considered Credit risk
Non fulfillment of contractual obligations by exporter including quality dispute.
Default or insolvency or any omission /commission of any agent of exporter/ buyer
Failure of buyer to obtain necessary approvals for imports
Causes inherent in nature of goods
Exchange fluctuation risks
Physical loss/damage to goods
Principles of Credit Insurance
Good Faith
Co-insurance
Spread of risks
Buyer & Country Underwriting
Premium Structure Basis
Country Grouping - 7 fold (237 countries)
( A1, A2, B1, B2,….. D)- Higher the country group, lower the premum rates
Terms of Payment- More superior the payment terms, lower the premium rate
Specific approval required for Restricted Cover countries
Shipments (Comprehensive Risks) Policy
Whole Turnover principle
Selective options for exclusion- LC/ Associates/ Consignments 90% cover
Minimum premium of Rs.10,000/-
Policy Period - 2 years
Buyer wise Credit limit
Discretionary limit
Monthly declarations with premium
No Claim Bonus – yearly 5%; max 50%
Small Exporters Policy
Turnover not exceeding Rs.50 Lakhs p.a.
Minimum Premium Rs.2000/-
Policy Period - one year
Higher percentage of cover-
Commercial risks 95%;
Political risks 100%
No Claim bonus
Quarterly Declarations
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
SME POLICY (Small Exporter Policy)
For exporters with Export Turnover not exceeding Rs10 Lakhs and registered under
MSME Act, 2006
Cover available upto Rs10 lakhs.
Annual premium Rs 5,000 and processing fee of Rs1,000
90% cover
Maximum claim payable is Rs3 lakhs on any buyer
No requirement of monthly declaration of shipments
Benefits For Exporters
Protection for account receivable
Reduction in Bad debt
Improvement in quality of financial planning
Enhancement in risk taking capacity
Easy access to bank finance on liberal terms
ECIB’S ( Export Credit Insurance for Banks) TO BANKS
Contract of insurance between bank & ECGC
Protects banks against losses in export credit due to
- Insolvency of exporter
- Protracted default of exporter
Benefits For Banks
Protection For Pecuniary Liabilities Against Funded and Non Funded Credit Facilities To
Exporters
Enables To Waive Collateral Securities
OBJECTIVE of ECGC
To PROMOTE EXPORTS Mainly by Protecting Exporters against COMMERCIAL &
POLITICAL RISKS in realising export proceeds
Protecting Banks against RISK OF DEFAULT in export credit
Protecting Investors against POLITICAL RISKS in Shareholders’ equity and loan In
overseas investments
ECGC details:
Established in 1957
Fully owned by GOI
Under administrative control of MOCI
Capital Base
Highest ICRA rating of IAAA
5 Regional Offices and 51 Branch Offices
All Branches ISO 9001:2000 certified
Member of Berne Union
MOU with GOI
Key Performance Highlights
What is Risk?
Uncertainty about future outcome due to :
Unexpected occurrence of events
Uncontrollable factors
Lack of Information
Risk Perceptions
What is Credit Risk
Definition: The potential that a debtor will fail to meet its payment obligations in
accordance with agreed terms.
Export credit risk:
a) Buyer related problems
b) Country related
Risk Management
Analysis, acceptance or mitigation
Risk avoidance
Risk Transfer
Risk Sharing
Risk retention
Payment Risks
Role of ECGC as an Export Credit Insurer
Providing export credit insurance covers to Exporters against loss in export of goods &
services under ST & MLT (POLICY Scheme)
Providing export credit insurance covers to Banks & FI’s to enable exporters obtain
better facilities from them (ECIB) (formerly known as Guarantees)
Role of ECGC as an Export Credit Insurer
Providing cover for Buyers Credit/ Line of Credit to Banks/ FIs
Providing Overseas Investment Insurance to - Indian Investors in Overseas Ventures
(Equity/Loans)
Risks covered -
Political
Commercial
Credit
Risks NOT considered Credit risk
Non fulfillment of contractual obligations by exporter including quality dispute.
Default or insolvency or any omission /commission of any agent of exporter/ buyer
Failure of buyer to obtain necessary approvals for imports
Causes inherent in nature of goods
Exchange fluctuation risks
Physical loss/damage to goods
Principles of Credit Insurance
Good Faith
Co-insurance
Spread of risks
Buyer & Country Underwriting
Premium Structure Basis
Country Grouping - 7 fold (237 countries)
( A1, A2, B1, B2,….. D)- Higher the country group, lower the premum rates
Terms of Payment- More superior the payment terms, lower the premium rate
Specific approval required for Restricted Cover countries
Shipments (Comprehensive Risks) Policy
Whole Turnover principle
Selective options for exclusion- LC/ Associates/ Consignments 90% cover
Minimum premium of Rs.10,000/-
Policy Period - 2 years
Buyer wise Credit limit
Discretionary limit
Monthly declarations with premium
No Claim Bonus – yearly 5%; max 50%
Small Exporters Policy
Turnover not exceeding Rs.50 Lakhs p.a.
Minimum Premium Rs.2000/-
Policy Period - one year
Higher percentage of cover-
Commercial risks 95%;
Political risks 100%
No Claim bonus
Quarterly Declarations
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
SME POLICY (Small Exporter Policy)
For exporters with Export Turnover not exceeding Rs10 Lakhs and registered under
MSME Act, 2006
Cover available upto Rs10 lakhs.
Annual premium Rs 5,000 and processing fee of Rs1,000
90% cover
Maximum claim payable is Rs3 lakhs on any buyer
No requirement of monthly declaration of shipments
Benefits For Exporters
Protection for account receivable
Reduction in Bad debt
Improvement in quality of financial planning
Enhancement in risk taking capacity
Easy access to bank finance on liberal terms
ECIB’S ( Export Credit Insurance for Banks) TO BANKS
Contract of insurance between bank & ECGC
Protects banks against losses in export credit due to
- Insolvency of exporter
- Protracted default of exporter
Benefits For Banks
Protection For Pecuniary Liabilities Against Funded and Non Funded Credit Facilities To
Exporters
Enables To Waive Collateral Securities
- Lesser Capital Deployment requirement.
No comments:
Post a Comment