You are on page 1of 24

(A Govt.

Of India Enterprises)


You focus on Export, We cover the risk

Presented to : Prof. Rajeev Gupta Presented By : Shreyans golchha Nikita mishra Kunal dindorkar Vishal raghuwanshi

What is ECGC?
Export Credit Guarantee Corporation of
India Limited. Established in the year 1957 by the Government of India. An export promotion organization which functions under Ministry of Commerce & Industry, Department of Commerce, Government of India.

Fifth largest credit insurer of the world in terms of coverage of national exports. The present paid-up capital of the company is Rs.800 crores. Authorized capital Rs.1000 crores.

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

What is Risk?
Uncertainty about the future outcome Lack of knowledge Imperfection in knowledge Possibility of Loss

Export Credit Risk

Exports Goods Services Credit Extending supplier credit: DP, DA, OA Risk Possibility of non-payment of accounts receivables

Types of Export Credit Risks

Political Risk
Some countries may experience major political instability defaults on payments exchange transfer blockages nationalization confiscation of property

Credit Risk
The risk of Insolvency Default Fraud Unwillingness to accept the goods on the part of the buyer

Exchange Risk
The possibility of variability in the exchange rate on account of the time lag between the date of contract and actual payment is referred to as 'Exchange Risk'

Transfer Risk..
Weakness in economy of Buyer's country, viz. low reserves, BOP problems
Failure of Buyer's Bank affecting payment of outstandings Exchange or trade controls introduced in Buyer's country

arising from all/any of the above

Legal Risk
Differences in law can be expected in overseas countries These may have an impact in such areas as:
import procedures taxation employment practices currency dealings property rights the protection of intellectual property agency/distributorship arrangements

ECGC Policies

Special Schemes Standard Policy

For short term shipments (180 Days)

Specific Policy
For exports under Deferred Payments, Project Exports, Service exports

Financial Guarantees to Banks

For Giving credit to exporters

(Transfer Guarantee ) To protect Banks Issuing L/C, Confirming L/C, Insurance Cover, Line of Credit, Overseas Investment Insurance & Exchange Fluctuation Risk Insurance

Standard Policy-Products
Small Exporters Policy Period of Policy: Twelve months as against 24 months in the case of Standard Policy. Minimum Premium: Premium payable will be determined on the basis of projected exports on an annual basis subject to a minimum premium of Rs. 2000/- for the policy period

Export Turnover Policy : Turnover policy is a variation of the standard policy for the benefit of large exporters who contribute not less than Rs.10 lacs per annum towards premium. Thus all the exporters who will pay a premium of Rs.10 lacs in a year are entitled to avail of it.

Specific Shipment Policy Products

Short Term (SSP-ST) Export (Specific Buyers) Policy Specific Shipment (Comprehensive Risks) Policy Specific Shipments (Political Risks) Policy

Service Policy Products

Specific Services Contract (Comprehensive Risks) Policy Specific Services Contract (Political Risks) Policy Software Project Policy IT-enabled Services (Specific Customer) Policy Construction Works Policy

Guarantees to Banks
Packing Credit Guarantee
It helps the exporter to obtain better facilities from their bankers. The Guarantees assure the banks that, in the event of an exporter failing to discharge his liabilities to the bank, ECGC would make good a major portion of the bank's loss. The bank is required to be co-insurer to the extent of the remaining loss

Export Finance Guarantee

This guarantee covers post-shipment advances granted by banks to exporters against export incentives receivable in the form of cash assistance, duty drawback, etc. The premium rate for this guarantee is 7 paisa per Rs.100 per month and the cover is 75 percent.

Special schemes
Transfer Guarantee Overseas Investment Guarantee Exchange Fluctuation Risk Cover

Application Process: ECGC

Application to the ECGC along With Rs. 10,000 as initial premium

A statement to be submitted to the ECGC Every month along with last months Statements & the monthly insurance Premium cheque (mandatory)

The list of exports also includes the value of export Shipments & insurance premium to be paid

This is the general process to avail the services of ECGC

Application is to be made to ECGC in case of non- receipt of payment within 4 months from the due date Documents required as proof
E-mails Faxes Reminders sent through banking channel In case of suspicion or fraud, ECGC can blacklist the importer or exporter