Download - Presentation of ECGC, Kolkata (1)

8/12/2019 Presentation of ECGC, Kolkata (1)

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EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

You focus on exports. We cover the

You focus on exports. We cover the risks.You focus on exports. We cover the

You focus on exports. We cover the risks.


WELCOME

TO A PRESENTATION ON

INSURANCE & RISK MANAGEMENT

and

ROLE OF ECGC


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ECGC Mission

To supportthe Indian export

industryby providing cost effectiveinsuranceand trade related

services to meet the needs of the

Indian exporters


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OBJECTIVE of ECGC

To PROMOTE EXPORTSMainly by

Protecting Exportersagainst

COMMERCIAL & POLITICAL RISKS In

realising export proceeds

Protecting Banks against

RISK OF DEFAULT in export credit

Protecting Investors against POLITICALRISKS in Shareholders equity and loan Inoverseas investments


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ECGC Fact sheet

Established in 1957

Fully owned by GOI

Under administrative control of MOCI

Capital Base

Highest ICRA rating of IAAA

5 Regional Offices and 51 Branch Offices

All Branches ISO 9001:2000 certified

Member of Berne Union

MOU with GOI


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Key Performance Highlights

Sr.

No.Description

Financial Years

( Audited Data)

2010-11 2011-12

1Gross Premium

incomeRs.885.47 cr. 1004.80 cr.

2 Claims Paid Rs.620.53 cr. 712.96 cr.

3RecoveriesReceived

Rs.136.07 cr. 168.69 cr.


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What is Risk?

Uncertainty abou t futu reoutcome due to :

Unexpected occurrence of events

Uncontrollable factors

Lack of Information


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You focus on exports. We cover theYou focus on exports. We cover the risks.You focus on exports. We cover theYou focus on exports. We cover the risks.


Risk Perceptions

Industry risk

Business risk

Risk of contract frustration

Risk of physical damage

Credit risk

Country Risk


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What is Credit Risk

Definition: The potentialthat a debtorwill failto

meet its payment obligationsin accordance with

agreed terms.

Export credit risk:

a) Buyer related problems

b) Country related


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Risk Management

Analysis, acceptance or mitigation

Risk avoidance

Risk Transfer

Risk Sharing

Risk retention


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PAYMENT RISK

RISK MANAGEMENT IN EXPORTS

Goods Receivables

Exchange

Risk

Loss or

Damage

Marine

Insurance

Hedging by

Authorized

Dealers

CREDIT

INSURANCE


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LC

Payment Risks

POLITICAL RISK

COUNTRYBUYER BANK

LC / NON LC

COMMERCIAL RISK

Payment Risks


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Role of ECGC as an Export Credit

Insurer

Providing export credit insurance coversto

Exporters

against loss in export of goods & services under

ST & MLT (POLICY Scheme)

Providing export creditinsurance coversto

Banks & FIsto enable exporters obtain better facilities from

them (ECIB) (formerly known as Guarantees)


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War, Civilwar, Internaldisturbances

exchangetransfer

blockages/delay

New import

restrictions,cancellation of

import licence,

etc.

Risks covered -Political

Diversion ofvoyage dueto war


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Insolvency ofbuyer/bank

Nonacceptanceof exportedshipment

Default ofbuyer/bank

Risks covered- Commercial


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Risks NOT considered Credit risk

Non fulfillment of contractual obligations by exporter

including quality dispute.

Default or insolvency or any omission /commission of any

agent of exporter/ buyer

Failure of buyer to obtain necessary approvals for

imports

Causes inherent in nature of goods Exchange fluctuation risks

Physical loss/damage to goods


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Principles of Credit Insurance

Good Faith

Co-insurance

Spread of risks


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Buyer & Country Underwriting

The 2 pillars of Export Credit Insurance :

and

BuyerUnderwritingthat assessesbuyer risks

Limit fixed on Buyer

CountryUnderwritingthat assessescountry risks

Country classification


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Products offered to Exporters

Declaration Based Policies

Whole Turnover

1) Standard (SCR) Policy

2) Small Exporters Policy

3) Export Turnover Policy

Specific transaction

1) Specific Shipment Policy

2) Specific Buyer Policy

3) Transfer Guarantee (for Banks)


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Exposure Based Policies

1) Single Buyer Exposure Policy

2) Multi buyer Exposure Policy

3) SME Policy


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Consignment Based Policies

1) Consignment Export Policy

2) Global Entity Policy


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Covers for IT/ITES industry

1) Software project exports policy

2) IT enabled (single customer) policy

3) IT enabled (multi customer) policy


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Premium Structure Basis

Country Grouping - 7 fold (237 countries)

( A1, A2, B1, B2,.. D)- Higher the country

group, lower the premum rates

Terms of Payment- More superior the payment

terms, lower the premium rate

Specific approval required for Restricted Cover

countries


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Shipments (Comprehensive Risks) Policy

Whole Turnover principle

Selective options for exclusion-

LC/ Associates/ Consignments 90% cover

Minimum premium of Rs.10,000/-

Policy Period - 2 years

Buyer wise Credit limit Discretionary limit

Monthly declarations with premium

No Claim Bonusyearly 5%; max 50%


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Small Exporters Policy

Turnover not exceeding Rs.50 Lakhs p.a.

Minimum Premium Rs.2000/-

Policy Period - one year Higher percentage of cover-

Commercial risks 95%;

Political risks 100% No Claim bonus

Quarterly Declarations


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Specific Shipment Policy (SSP)

Covering one shipment or One contract

Processing fee of Rs.1000/-

80% cover

Premium higher than standard premium rates

Upfront premium before issue of Policy

Commercial / Political risks and L/C

comprehensive risks covered

Submission of Shipment Statement and

realisation report


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SME POLICY

For exporters with Export Turnover notexceeding Rs10 Lakhs andregistered underMSME Act, 2006

Cover available upto Rs10 lakhs. Annual premium Rs 5,000 and processingfee of Rs1,000

90% cover

Maximum claim payable is Rs3 lakhs on anybuyer

No requirement of monthly declaration ofshipments


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Benefits For Exporters

Protection for account receivable

Reduction in Bad debt

Improvement in quality of financial planning

Enhancement in risk taking capacity

Easy access to bank finance on liberal terms




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ECIBS TO BANKS

Contract of insurance between bank & ECGC

Protects banks against losses in export credit

due to

- Insolvency of exporter

- Protracted default of exporter




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Benefits For Banks

Protection For Pecuniary Liabilities Against

Funded and Non Funded Credit Facilities To

Exporters

Enables To Waive Collateral Securities

Lesser Capital Deployment requirement.




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EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITEDEXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

In the Service of Exporters and

Banks since 1957

hank YouPlease visit us at: www.ecgc.in

: [email protected];[email protected]
http://www.ecgc.in/http://www.ecgc.in/

Download - Presentation of ECGC, Kolkata (1)

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