Export Credit Guarantee Corporation of

India Ltd.
Introduction
 Established in the year 1957 by the Govt. of India
 To strengthen the export promotion drive by covering the risk
of exporting on credit.
 Export Promotion Organisation
 Functions under Ministry of Commerce & Industry
 Fifth largest credit insurer of the world in terms of coverage of
national exports
Products and Services

Credit Insurance Policies

Maturity Factoring
Guarantees to Banks
Packing Credit Guarantee
Special Schemes
Exchange Fluctuation Risk Cover
Functions
• Overseas investment insurance to Indian companies
investing in joint ventures abroad in the form of
equity or loans.
• Credit risk insurance to exporters against loss of
goods and services.
• Credit protection against bad debts.
• 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.
• Exchange fluctuation risk cover after successful bid.
How does ECGC help exporters?
• Makes it easy to obtain export finance from
banks/financial institutions

• Assists exporters in recovering bad debts

• Provides information on credit-worthiness of

overseas buyers

• Provides guidance in export-related activities

• Makes available information on different

countries with its own credit ratings
Shipments Covered

 Shipments against L/C.

 Shipments to Associates.

 Shipments on consignment basis.

 Shipment made by Air, by Sea and by Post.

Need for export credit insurance
Payment for exports are always fraught with risk
War or civil war may block or delay payment
Coup or an insurrection
Balance of payment problems
Insolvency or protracted default of buyers
Interruption or diversion of voyage outside India
resulting in payment additional of freight or
insurance charges, which cannot be recovered,
from the buyer.
What is factoring?

1
Conversion of credit Sales into Cash
 Non Recourse Maturity Export
Factoring
When no pre-financing of the receivables is done, but
the Factor undertakes to pay the amount due only on
maturity of the credit period, it is called maturity
factoring.
Unique features
Sales register maintenance in respect of factored
transactions.
Regular monitoring of outstanding credits, facilitating
collection of receivables on due date, recovery, at its
own cost, of all recoverable bad debts.
Benefits to Financial Institutions -
via factoring
 Gets 0% risk assets.
 Assured payment on pre-determined date/on
crystallization (claims within 3-days)
 100% payment.
SWOT ANALYSIS
STRENGTH
 Project execution competency
 High financial strength
 Strong business equity consumer Nation wide branch
network & synergy (confidence with co-insurance)
 High experience, infrastructure & latest Internet assisted
facilities.
 High level of managerial efficiency
WEAKNESS

 Not much established branch network infrastructure

in remote places

 Not much established and happy subscriber base to

leverage in
OPPORTUNITIES

 Large addressal market created by new relaxed export policies of

Govt. of India

 Large demand for fresh policyholders due to increased facility of

easy export finance from banks

 Increasing trend of bankruptcy of big/established importers in

Europe/abroad

 Increasing rate of Bank’s N.P.A, due to defaulters in export

credits
THREATS

 Regulatory issues-from I.R.D.A. (Insurance Regulatory &

Development Authority of India)

 Opening up of Insurance to Private sectors attracts international

giants.

 Reactive Premium rates/pricing by private sectors

Benefits to Exporters via factoring

 Up to 100% credit risk protection

 Repudiation of loss up to 25%(under non acceptance of
goods/bills subject to non dispute)
 Gets receivables management services
 Sales ledger maintenance
 Reduction in administrative cost.
 Cover –single buyer
RISKS COVERED

Commercial risks:
 
 Insolvency of the buyer.
 Failure of the buyer to make the payment due within a
specified period, normally 4 months from the due date. Buyer’s
failure to accept the goods, subject to certain conditions.
Political risks:

 Imposition of restrictions by the Government of the buyer’s

country or any Government action, which may block or delay
the transfer of payment made by the buyer.
 War, Civil war, revolution or civil disturbances in the buyer’s
country.
 New import restrictions or cancellation of a valid import
license.
 Interruption or diversion of voyage outside India resulting in
payment additional of freight or insurance charges, which
cannot be recovered, from the buyer.
How to Obtain a Policy
Application to the nearest office of ECGC

Confirm acceptance of premium rates

Deposit a minimum premium of 10000/-

Receipt of confirmation of binding doucment

ECGC and Liability Acceptance for Credit Risks
When application for Credit Limit on a buyer has not
been made:
 Case 1:Commercial Risks upto maximum of Rs 20,00,000
for DP/CAD transactions.
 Condition:
Claims limited to 4 buyers during policy year

 Case 2:Commercial Risks upto maximum of 15,00,000 for

DA/open delivery transactions and Rs 40,00,000 for
DP/CAD transactions
 Condition:
 Atleast one shipment has been effected during last policy year on similar
terms to the value for which they wanted to avail of the discretionary
limit & payment for that shipment has been received on due date.
 Case 3:Commercial Risks upto maximum of Rs 10,00,000 for
DA/OD transactions.
 Condition:
Exporters who have paid at least Rs 5 lac as premium in the immediately
preceding policy year.
PERFORMANCE HIGHLIGHTS OF E.C.G.C

2008 2009