Overview of Export Credit

Guarantee Corporation (ECGC)

BUSINESS ASPECTS IN BANKING AND INSURANCE

Group Members

Shashank Agarwal (2)

Harsh Aladia (4)

Roven Dsouza (27)

Jash Gada (29)

Saloni Jain (37)

Mili Madani (51)

Concept behind creating ECGC

Boost export promotion by covering the risk of exporting on credit.

Acts as a protection against loss

Shift focus on business related activities rather than payment issues.

Role of ECGCTo promote exports mainly by

• Protecting Exporters against commercial and political risks in realizing export proceeds

• Protecting Banks against Risks of Default in export credit • Protecting Investors against Political risks in Shareholders’ equity and loan in overseas investments

Specific Functions of ECGc1. Insurance coverage for those exporters who are entering in international trade for the first time after

economic liberalizations.

2. First- hand information in export-realted activities, particularly in areas of potentail risk associated with countries and mode of payment in globally changing trade regime and offer such guidance to exporters.

3. Through its network with other credit risk agencies in the world, it publishes information on risk perception on different countries with its own credit ratings

4. Facilitator in obtaining export finance from banks and financial institutions through various guarantees

5. Helps in recovery of bad debts from defaulters by helping them precede legal and diplomatic channels.

6. Database of exporters and and importers and shares creditworthiness.

7. Customized products to exporters.

How is it helpful for the exporters? Helps in expansion of sales

Protects exporter against bad debts.

Credit facilitation and boost borrowing power

Stabilize and assure cash flow.

Explore and develop new markets.

Protection againts corporate insolvency, bankruptcy.

Helps in dealing with concerned country’s courts and administration of recovery order.

Attributes towards success

5 Regional Offices and 51 Branch Offices

All Branches ISO 9001:2000 certified

Member of Berne Union(53 members from 42 countries)

MOU with GOI

Authorized capital of Rs. 1000 crores and paid-up Rs. 900 crores.

Alliance with Coface (France), D&B

Registred with IRDA

Accredited with “iAAA” by ICRA

GOI instilled confidence by estblishing NEIA(National Export Insurance Account) with corpus of Rs. 2000 crores.

Tie-up with NSIC (National Small Industries Corporation)

Fulll-fledged Factoring services.

Bancassurance

Two pillars of Credit Insurance

Buyer Underwriting

that assesses buyer risks

Limit fixed on Buyer

Country Underwriting that assesses country risks

Country classification

Risks covered

Buyer risks

Bank risks

Commercial risks

Political risks

Buyer Risks Bank Risks

Insolvency

Protracted Default

Contract Repudiation

Insolvency of the bank

Protected Default

War, Civil war,

Internal disturbance

sExchang

e transfer blockages/delay

New import restrictions,

cancellation of import license, etc.

New import restrictions,

cancellation of import license, etc.

Political Risks

Diversion of voyage due to war

Diversion of voyage due to war

Insolvency of

buyer/bank

Non acceptance of exported shipment

Default of buyer/bank

Commercial Risks

ECGC Policies

Specific Policy

For exports under Deferred Payments,

Project Exports,Service exports

Standard Policy

For short term shipments(180 Days)

Financial Guarantees to

Banks

For Giving credit to exporters

Special Schemes

(Transfer Guarantee )

To protect BanksIssuing L/C,

Confirming L/C,Insurance Cover,Line of Credit,

Overseas Investment Insurance & Exchange

Fluctuation Risk Insurance

Products offered to Exporters

Declaration Based Policy

Exposure Based Policy

Consignment Based Policy

Covers for IT Industry

Main Policies

Shipment Policy

Small Exporters Policy

Specific Shipment Policy

SME Policy

Benefits to 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

Benefits to Banks Contract of insurance between bank & ECGC

Protects banks against losses in export credit due to

- Insolvency of exporter

- Protracted default of exporter

Protection For Pecuniary Liabilities

Enables To Waive Collateral Securities

Lesser Capital Deployment requirement.

Bibliography

https://www.ecgc.in/portal/

http://en.wikipedia.org/wiki/Export_Credit_Guarantee_Corporation_of_India

Thank you.