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ECGC

ECGC

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Published by imad rehman

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Published by: imad rehman on Apr 03, 2011
Copyright:Attribution Non-commercial

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07/29/2013

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Export Credit GuaranteeCorporation
DR. A.K. SENGUPTA
FORMER DEAN, INDIAN INSTITUTE OF FOREIGNTRADE 
 
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In the context of growing competition in international marketsno exporter can manage without selling goods on credit.Giving credit poses two problems to an exporter:(i) he should find enough money to offer credit to hisoverseas buyer, and(ii) he should be prepared to take the credit risks.Exporting on credit is not without risk. The overseas buyer may default; he may go bankrupt; there may be anearthquake or typhoon, a war or coup in his country whichmay wreck his fortunes. There may be sudden import oexchange restrictions. The Export Credit GuaranteeCorporation (ECGC) covers the exporter against these risks,.The ECGC also provides guarantees to the financing banksto enable them to provide adequate finance to the exporters.
 
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Covers Issued by ECGC
The covers issued by ECGC could be divided broadly intofour groups:I.Standard policies issued to exporters to protect themagainst the risk of not receiving payments while tradingwith overseas buyers on short-term credit:II.Specific policies designed to protect Indian firms againstthe risk of not receiving payments in respect of (a)exports on deferred payment terms, (b) servicesrendered to foreign parties, and (c) constructionworks undertaken abroad;III.Financial guarantees issued to banks against the risksinvolved in providing credit to exporters; andIV.Special Schemes Insurance Cover for Buyer¶s Credit,Line of Credit, Joint Ventures and OverseasInvestment.

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