ECGC Scheme - Summary
To support Indian exporters with export credit insurance, the Government of India established the Export Credit Guarantee Corporation of India Limited (ECGC). This initiative, known as the ECGC Scheme, is designed to provide crucial export credit insurance and guarantee services to exporters across the nation.
Understanding the ECGC Scheme
The ECGC Scheme serves as a financial safety net for exporters, safeguarding them from the risks of non-payment and other trade-related uncertainties. By offering a variety of credit insurance products and services, this scheme helps exporters manage the financial risks linked to international trade.
ECGC Scheme for Exporters
With the ECGC Scheme, exporters can secure insurance coverage for their export receivables. This means they will still receive payment for their goods or services, even if the overseas buyer fails to pay or goes bankrupt. Such protection gives exporters the confidence needed to grow their businesses in foreign markets without worrying excessively about financial risks. ЁЯМП
Functions of ECGC
- Provides a range of credit risk insurance covers to exporters against losses in the export of goods and services.
- Offers guarantees to banks and financial institutions to help exporters get better deals.
- Provides Overseas Investment Insurance for Indian companies investing abroad, whether through equity or loans.
What ECGC Provides
- Insurance protection against payment risks for exporters.
- Guidance on export-related activities.
- Information on different countries along with their credit ratings.
- Eases the process of obtaining export finance from banks and financial institutions.
- Helps exporters recover bad debts.
- Offers insights on the credit-worthiness of foreign buyers.
The insurance covers provided by ECGC can be classified into four broad categories:
1. Standard Policy
The Standard Policy, also known as the Shipments (Comprehensive Risks) Policy, is tailored for short-term credit risks (up to 180 days). It covers both commercial and political risks from the date of shipment.
2. Other Specific Policies
Specific Policies protect Indian firms from payment risks associated with a) exports on deferred payment terms, b) services provided to foreign clients, and c) construction projects abroad. Each policy is issued for specific contracts and covers risks typically from the contract date.
ECGC offers a Construction Works Policy to safeguard Indian contractors undertaking civil construction jobs overseas.
3. Financial Guarantees
Financial Guarantees are provided to banks in India, shielding them from potential losses during the pre-shipment and post-shipment financing stages. These guarantees also cover various non-fund based facilities offered to exporters.
Export Performance Guarantee is an insurance cover for banks, which allows them to issue various types of guarantees on behalf of exporters, facilitating their export transactions.
4. Special Schemes
These include the Transfer Guarantee, which protects banks confirming Letters of Credit opened by foreign banks, along with Insurance cover for Buyers Credit, Lines of Credit, and Exchange Fluctuation Risk Insurance.
Download the ECGC Scheme in PDF format using the link provided below for more details.