ECGC &

ITS ROLE IN THE SERVICE OF EXPORT

INDUSTRY

PRESENTED TO:-Prof. RUTURAJ BABER

PRESENTED BY:-MEENAL RAJ MAHANAPRIYANKA KUSHWAHMBA IV (B)

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BACKGROUNDThe Government of India set up the Export Risks Insurance Corporation (ERIC) in July 1957 in order to provide export credit insurance support to Indian exporters.It was transformed into Export Credit & Guarantee Corporation Limited (ECGC) in 1964.To bring the Indian identity into sharper focus, the corporation’s name was once again changed to the present Export Credit Guarantee Corporation of India Limited in 1983.

INTRODUCTION Mr. N. Shankar (Chairman &M.D) and Mrs. Geetha

Muralidhar is the Executive Director of ECGC and it functions under the Administrative Control of the Ministry of Commerce and is managed by a Board of Directors representing Government, Banking, Insurance, Trade, Industry etc.

It is the fifth largest credit insurer of the world in terms of coverage of national exports.

Present paid-up capital  is Rs.1200 crores and authorized capital Rs.5000 crores.

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 them.

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

It provide guidance in export related activities.

CONT…It provides information on credit-worthiness of overseas buyers.

It provides information on about 180 countries with its own credit rating.

It assists exporters in recovering bad debts.

NEED FOR EXPORT CREDIT INSURANCE

Far-reaching political and economic changes that are sweeping the world.An outbreak of war or civil war may block or delay payment for goods exported.Economic difficulties or balance of payment problems may lead a country to impose restrictions on either import of certain goods or on transfer of payments for goods imported.Export credit insurance is designed to protect exporters from the consequences of the payment risks, both political and commercial, and to enable them to expand their overseas business without fear of loss.

VARIOUS POLICY SCHEMES There are various policy schemes offered by the

Corporation for insuring credit risks related to receivables of Project Exporters for their Medium and Long Term Transaction overseas. Contract Policy Shipment(s) Policy Services Policy Construction Works Policy Overseas Investment Insurance

CONTRACT POLICY

Specific Contract Policy can be obtained by exporters that have secured contract for Turnkey Projects, or any other contract which involves supplies of capital goods and services for erection and commissioning of the project. The cover provides protection against non-receipt of payments due to commercial and/or political risks. Loss Coverage: 90%

SHIPMENTS POLICY

Specific Shipments Policy can be obtained by exporters that have secured contract for supply of capital goods such as machinery or equipment on deferred terms of payment. The cover provides protection against non-receipt of payments due to commercial and/or political risks.Loss Coverage: 90%

SERVICES POLICY

Specific Services Policy covers contracts under which only services are to be provided. The cover offers protection to the Indian Exporters against payment risks involved in rendering services to the foreign buyers. A wide rage of services like technical or professional, hiring or leasing can be covered under these policies.Loss Coverage: 90%

CONSTRUCTION WORKS POLICY

Construction Works Policy is designed to provide cover to an Indian Contractor who executes a civil construction job abroad. The cover provides protection against non-receipt of payments due to commercial and/or political risks.Loss Coverage: 85%

OVERSEAS INVESTMENT INSURANCE

Overseas Investment Insurance provide cover for the investments made by Indian investor abroad in joint ventures or in their wholly owned subsidiary either in the form of equity or untied loan. The basic principle is that the investment should emanate from India and benefit of dividend/interest there from should accrue to India. The cover provides protection against non-receipt of receivables due to specified political risks. Cover available up to 15 years. Extendable up to 20 years with reduced insured amount.Loss Coverage: 90%

RISKS

COMMERCIAL POLITICAL LC OPENING BANK RISKS

INSOLVENCY OF BUYER

PROTRACTED DEFAULT OF

BUYER

BUYER’S FAILURE TO

ACCEPT GOODS

WAR, CIVIL WAR, REVOLUTIONS IN

BUYER’S COUNTRY

NEW IMPORT RESTRICTIONS

TRANSFER DELAYS

INSOLVENCY

DEFAULT

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 fulfill the terms of the contract or negligence on his part.

COMMON OBLIGATIONS OF THE POLICIES

Obtain indicative premium rate at bid stage.Obtain in principle approval.Seek cover after payment of premium.Declaration of overdue payments.Filing of claim within 12 months from due date.Sharing of recovery.

HIGHLIGHTSCover can be either for Political or Comprehensive Risks.Add on pre-shipment risk cover can also be obtained.Cover for full insurable value including retention portion.Cover for third country exports as well.Premium in installments.Reduced premium for projects funded by Multi-lateral agencies.Reduced loss coverage with proportionate reduction in premium.

AWARDS & RECOGNITIONS

First Prize for Excellence Implementation of Official Language under the scheme "Shield for Excellent Official Language Implementation" by Ministry of Commerce during 2013-14.

ECGC of India has been conferred with the “First Prize” under “ Indira Gandhi Rajbhasha Award” in Region “B” for excellent implementation of Rajbhasha. Smt. Geetha Mularidhar , Executive Director, has received this prestigious award from Honorable President of India Shri Pranab Mukherjee on 15th November 2014 in a ceremony organized at Vigyan Bhavan, New Delhi.

THANKYOU!