ECGC introduces new scheme to provide enhanced export credit risk insurance cover

Mumbai (Maharashtra) [India], July 26 : ECGC Ltd, formerly known as Export Credit Guarantee Corporation of India Ltd, on Tuesday introduced a new scheme to provide enhanced export credit risk insurance cover to the extent of 90 per cent to support small exporters.
The scheme is expected to benefit a number of small-scale exporters availing of export credit with banks. This will also enable the small exporters to explore new markets/new buyers and diversify their existing product portfolio competitively.
Small exporters will be provided the support under the Export Credit Insurance for Banks Whole Turnover Packaging Credit and Post Shipment (ECIB- WTPC & PS).
Addressing a press conference in Mumbai, ECGC Chairman M Senthilnathan said, "We expect the cover to play a game changing role. We expect this to bring up percentage of accounts with up to Rs 20 crore, thereby lending further stability to ECGC portfolio".
"By giving 90 per cent cover to banks, we expect more small companies to get export credit from banks, benefiting these industries greatly. We expect banks to provide more concessions. The net effect will be benefit to exporters, involving reduction in interest rate," he said.
Explaining the role played by the premier Export Credit Agency of the Government of India, Senthilnathan said, "Countercyclical role played by organizations like ECGC is similar to that of a fireman, when credit is suffering, credit insurance agencies step in to stabilize the market".
Senthilnathan further remarked, "all governments took various measures to stabilize the market in view of COVID-19, because of which, ECGC has not withdrawn cover given to exporters, against expectations, export credit insurance agencies all over the world have witnessed only average levels of claim ratios, not high ratios."
The enhanced cover shall be available for manufacturer- exporters availing fund-based export credit working capital limit up to Rs 20 crore (i.e., total Packaging Credit and Post Shipment limit per exporter/exporter-group) excluding the Gems, Jewellery & Diamond sector and merchant exporters/traders.
This new scheme will enable the banks holding ECGC's WT-ECIB cover to explore the possibility of reducing interest rates further so that all the stakeholders are benefitted. The enhanced cover percentage shall be made available to State Bank of India as per the previous year's premium rate in view of its favourable claim premium ratio. However, for other Banks there may be a moderate increase in the prevailing premium rates, according to a statement released by the Ministry of Commerce & Industry.
ECGC extended support to exports amounting to Rs 6.18 lakh crore in the financial year 2021-22. As on 31st March 2022, more than 6,700 distinct exporters benefitted by the direct cover issued to exporters and more than 9,000 distinct exporters benefitted under the Export Credit Insurance for Banks (ECIB). Around 96 per cent of these are small exporters, the ministry said.