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Presentation on ECGC Policies and Guarantees and Claim Procedures P S Murali

ECGC, an overview
Established in 19 ! CPSE under " Ministry o# Commerce $ %ndustry &oard Constituents " G'%, (&%, )%s, %ndustry Paid up Capital as on *1+,*+-,1*. (s 1,,, Crores /et 0orth as on *1+,*+-,1* . (s -,1*! Crores /o+ o# Employees as on *1+,*+-,1*. 23 %S' 9,,14-,,2 certi#ied i555 rated by %C(5, an %ndian

E7tends credit insurance covers to e7porters against credit losses in e7port o# goods and services %ssues credit insurance covers to ban6s $ #inancial institutions to enable them to e7tend better #inancial #acilities to e7porters Provides medium and long4 term covers #or Pro8ect E7porters 9 De#erred Credits Provides 'verseas

(ole o# ECGC

&usiness Pro#ile
Covers to "#$orters Short Term(ST)
1. Declaration ased Policies !."#$osure ased Policies %.S$eci&ic Shi$ments Policy '.(onsignment "#$orts Policies
Medium and Long Term (M& LT)

an-s)*Is
Short Term and Medium & Long Term

(redit Insurance 1. S$eci&ic (ontracts Policies !.S$eci&ic Shi$ments Policies %. S$eci&ic Overseas Services Investment Policies Policy Insurance

*und +ased P( ) PS

,on &und ased Surety

S$ecial schemes 1. Lines o& credit !. uyers credit

?ypes o# (is6s covered


(is6s Covere d "#$orters (ommercial .is1. Insolvency !. Protracted De&ault %. .e$udiation '. Insolvency o& L( O$ening an-

an-s)*Is
Insolvency Insolvency o& o& the the "#$orter "#$orter Protracted De&ault o& the "#$orter

Political .is-

1. /ar. (ivil /ar "tc !. Im$ort .estrictions %. Trans&er Delay ' .Diversion o& 0oyage 1. "#$ro$riation

(is6 Evaluation 4 &uyer &uyer 5ssessment )i7ing a limit on the buyer . 'pinion o# the (eporting 5gency Commodity E7ported )inancials o# the &uyer %nsurer@s $ E7porter@s e7perience Credit (is6 %nsurer accepts liability o# the buyer based on the assessment o# the various #actors and the credit

Credit Insurance cover (Short term) Small


E7porters Policy
To encourage Small "#$orters To $rotect +oth micro e#$orters To cover (onsignment e#$orts
Consignme nt E7ports Global Entity or Stoc6holdi ng agent Policy

Shipment comprehensive ris6s Policy


To (over all Transactions *or Large "#$orters To cover S$eci&ic Transactions

MSME policy

3E7port ?urnover Policy

ST Policies

To cover Services

To cover S$eci&ic uyer

Multi buyer e7posure Policy Speci#ic Shipment s Policy

Services Policy

3E7ports ;speci#ic buyer> 3&uyer


2

(is6s not covered 4 Policy


Commercial disputes including <uality dispute &uyer@s #ailure to obtain %mport license %nsolvency9de#ault o# 5gents (is6s covered by general %nsurers E7change rate #luctuation )ailure, including commissions and omission , on the part o# any agent o# the e7porter or collecting ban6

Common =apses 4 E7porter Delay in reporting de#ault /o 5dvance premium available Prior approval not ta6en #or e7tension Ma6ing #urther shipments when earlier bills are already overdue

EC%& 4 )eatures
%ssued to ban6s $ )%s, either individually or on whole turnover basis, to cover their pre and post shipment advances to e7porters against the ris6 o# insolvency or protracted de#ault+ Ma7imum =iability, Discretionary =imit, Set =imit $ E7clusions Protection varies #rom ,A to 9 A

Bnderwriting o# ris6s based on &an6@s credit appraisal note, #inancials, ECGC e7perience etc+ Special Conditions"GCD Sector, %ron 're Sector, 5ll Sectors Claim payment with recourse

EC%& 4 Process #low


Issue).ene6al
I& succeeds Sanction)"nhanc ement).ene6al

Limit ,oti&ication)4$$roval Declaration and Premium Delay in


re$ayment

.egularised

"#tensions
I& not regularised

,ursing
I& &ails

S4L
Delisting

Listi ng

.e$ort o& De&ault .e$ayment

(laim

.e5ection
*ull .ecovery

Payment .ecovery)6rit e o&&

EC%& 4 &ene#its
)low o# ade<uate credit to e7porters4 bac6 up o# insurance Competitive pricing o# credit =ower margins 9 collateral securities %ncreased li<uidity " claims payment =ower weights #or ris6 on e7port credits covered by ECGC 4 Capital 5de<uacy =ower provisioning #or /P5s to the e7tent o# ECGC coverage 4 (&% norms &etter customer selection 5pproval =ist ;S5=> " Speci#ic

%nterventions already in place GCD Sector


Standard accounts up to (s crores, under each cover ;PC and PS>, covered by way o# noti#ication+ &eyond (s - crores, approval #rom ECGC is mandatory+ Special conditions .4 ;1> Credit score should be e<ual to or more than ,A+ ;-> &uyer 5pproval;&S5=> Speci#ic veri#ication

%nterventions already in place GCD Sector


;*> Credit in#ormation overseas buyers should satis#actory on be

;1> 'verdue, i# any, should not be more than A o# limit 9 outstanding, whichever, is lower and should not be more than *, days #rom the original due date ; > %ncremental limits 9 #resh limits sanctioned on or a#ter ,1+,!+-,1-, the percentage o#

(ecent %nterventions4 implemented )urther conditions .4 GCD Sector

ECGC@s CMDs communication to CMDs o# all &an6s holding 0? covers dated , +,-+-,1*+ a> 5ggregate cover to large EC%& accounts would presently be limited to ECGC@s prudential limit o# (s 1,-19 crores per e7porter and to (s+1,2-2 crores per e7porter group, being ,A 9 ! A o# the /et 0orth o# the

(ecent %nterventions4 implemented Sector b> Covers GCD would be available on


credit limits sanctioned based on pro8ection o# turnover up to 1-,A o# the previous year@s turnover and up to a ma7imum o# 1,A o# the anticipated annual e7port turnover o# the e7porter+ c> 5ll other e7isting conditions, such as ,A cover #or incremental e7posure,

(ecent %nterventions4 implemented d> 5dhoc 9GCD Standy Sector limits beyond

the MP&) would not be approved in the normal course+ ECGC would consider only in e7ceptional cases+ e> &an6s to sanction and intimate to ECGC, speci#ic Pre4 shipment limits " not to be combined with CC limits ; even i# combined in their sanction, &an6s to intimate ECGC o# the e7act PC limits " &an6s to ta6e prior approval o# ECGC i# the PC

(ecent %nterventions4 implemented GCD Sector #> )or incremental e7posures,


additional collateral security o# -,A to be ta6en, to start with %t is clari#ied that the term D@incremental e7posures@@ re#ers to the additional e7posure over and above the previous limit9s already approved by ECGC, #or the e7porter 9 group+

(ecent %nterventions4 implemented a> &an6s 5ll to obtain satis#actory, Sectors recent credit reports ;not more

than one year old> on overseas buyers #rom reputed Credit %n#ormation 5gencies ;C%5>, prior to e7tending credit against bills drawn on overseas buyers, under Post Shipment+ &an6s, i# they so desire, may obtain the list o# C%5s available with ECGC+ DSatis#actory@ credit report means a C( to be Satis#actory by your &an6, based

(ecent %nterventions4 implemented b> &an6s to veri#y &uyer Speci#ic 5ll Sectors

5pproval =ist ;&S5=> maintained by ECGC, prior to granting advances under Post4Shipment by re#erring to the ECGC website " &an6s already have electronic access to ECGC@s &S5=+ c> &an6s to obtain the approval o# the Corporation, irrespective o# the 5sset Classi#ication o# the account, where per buyer limit 9 e7posure e7ceeds (s 1,, crores

(ecent %nterventions4 implemented d> &an6s to obtain prior approval 5ll Sectors

o# the Corporation where the individual e7porter limit 9 e7porter group limit ;PC and PS limit> is e<ual to or more than (s -,, Crores+ e> &an6s to obtain prior approval o# the Corporation, irrespective o# the 5sset Classi#ication, where the e7porter has diversi#ied into unrelated business activities, wherein the share o# the unrelated business

(ecent %nterventions4 implemented ?he term 5ll D@unrelated Sectors business

activities@@ is clari#ied as a shi#t #rom the e7porter@s normal 9 traditional business activity ; in terms o# commodities>, as de#ined by the %?C ;ES> " %ndian ?rade Classi#ication based on Earmonished System, which is #ollowed by %ndian Customes and 5llied 5gencies and adopted #or all %mport 9 E7port 'perations+ Merchant E7porters would be

(ecent %nterventions implemented GCD Sector


#>&an6s to sanction and intimate to ECGC, speci#ic Pre4 shipment limits " not to be combined with CC limits ;even i# combined in their sanction, &an6s to intimate ECGC o# the e7act PC limits " &an6s to ta6e prior approval o# ECGC i# the PC component ;out o# CC e7ceeds (s - crs or - A o# the combined limit

EC%& Common =apses 'bserved


/on reporting o# sanctioned limit and /on payment o# premium at the relevant point o# time+ /ot obtaining Speci#ic 5pproval in S5= cases+ /ot obtaining approval #or F/ew 5ccountsG beyond the Discretionary =imit+ Delay in #iling (eport o# De#ault+ Continue granting advances

EC%& 4Common =apses Deterioration in 5sset 'bserved


Classi#ication, not in#ormed to ECGC+ ;(estructuring>

BtiliHation o# the Pac6ing Credit advances to ad8ust other dues o# the e7porter+ 5dvances granted a#ter /P5 date, without prior approval #rom ECGC+ Sale 9 Change in the Collateral securities, without approval #rom ECGC ;(eduction in collateral coverage>+

EC%&4Common =apses &ill proceeds not ad8usted to Pac6ing 'bserved Credit account+

Continuing to grant advances against bills drawn on de#aulted buyers, e7cept where the proceeds have not gone to ad8ust the e7isting Pac6ing Credit dues+ PC advances have gone to ad8ust the payment o# Devolved =9C+ Conversion o# overdue into 0C?=, without the prior

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