ECGC OF INDIA LTDECGC OF INDIA LTD

MISSION OF ECGCMISSION OF ECGC

• To support the Indian export industry by

providing cost effective insurance and

trade related services to meet the needs of

Indian export market .

CORPORATECORPORATE DETAILSDETAILS

• ESTABLISHED IN• SETUP BY

• MANAGED BY • PRESENT CMD• REGISTERED OFFICE

• REGIONAL OFFICES• BRANCH OFFICES

• 1957

• GOVT OF INDIA UNDER CONTROL OF MINISTRY OF COMMERCE

• BOARD OF DIRECTORS

• Shri FERNANDES, IAS

• 10th FL, EXPRESS TOWERS, NARIMAN POINT, MUMBAI.

• 5

• 50

• WHEN EXPORTERS EXTEND CREDIT TO THEIR OVERSEAS BUYERS ARE THEY SURE THAT PAYMENT WILL COME?

FUNCTIONS OF ECGCFUNCTIONS OF ECGC

• Providing credit insurance covers to exporters against loss in export of goods & services for short & long term transactions.

• Providing guarantees to banks & financial institutions to enable exporters obtain better facilities from them .

• Providing Overseas Investment Insurance to Exporters.- Indian Enterprenuers in Overseas Ventures (Equity/Loans)

RISKS COVEREDRISKS COVERED

A) COMMERCIAL

1) Insolvency of buyer

2) Protracted Default

3) Non acceptance of goods

4) Insolvency/default of L/C opening bank

RISKS COVERED (CONTD)RISKS COVERED (CONTD)

B) POLITICAL

1) Transfer delay

2) War, Civil war, revolution,civil

disturbance in buyer’s country

3) New Import restrictions

4) Interruption/diversion of voyage

Various ProductsVarious Products

• Standard policy• Small Exporters policy• Export Turnover policy• Export (Specific Buyer) Policy• Specific Shipment Policy• BUYER EXPOSURE POLICY• Services / ITES / Software Exports Policy• With out recourse Export Maturity Factoring

TYPES OF GUARANTEESTYPES OF GUARANTEES

• PACKING CREDIT - INPCG AND WTPCG

• POST SHIPMENT - INPSG AND WTPSG

• EXPORT PERFORMANCE

• EXPORT PRODUCTION FINANCE

• EXPORT FINANCE GUARANTEE

• TRANSFER GUARANTEE

FEATURES OF OUR FEATURES OF OUR GUARANTEE SCHEMESGUARANTEE SCHEMES

•Protects financial institutions (Banks) against

non payment by the exporter borrower.

•Financial institutions will be able to lend finance on liberal terms

• Guarantee will be security in addition to their collateral securities which will be decided by the bank.

ECGC COVERS THE ECGC COVERS THE FOLLOWING RISKFOLLOWING RISK

• Protracted default of exporters

• Protracted Default: nonpayment of export advances for a continuous period of 4 months counted from the due date/extended due date

•Insolvency of exporters

•Insolvency: declared insolvent by a competent court of law in terms of the Insolvency Act

Eligible Exporters / advancesEligible Exporters / advances

•All exporters involved in export of goods / services are eligible except those exporters placed in the ‘Caution List’ of the RBI.

•Exporters placed in the ‘Specific Approval List’ of ECGC are eligible only with prior approval

• PC advances are sanctioned for purchase/ manufacture/ processing /packing of goods meant for exports

•Interest on PC advances will not get cover.

Eligible Exporters / advances Eligible Exporters / advances (contd.)(contd.)

POST SHIPMENT EXPORT CREDIT GUARANTEE

- - for covering post shipment credit by banks to exporters

• PERFORMANCE GUARANTEES

- Indemnities to banks for covering performance guarantees issued by them on behalf of exporters.

WTPCG / WTPSGWTPCG / WTPSG

• Guarantee is issued to the Central office of the Bank covering all their export accounts on All-India basis

•Period - one year (July-June)

• Most of the banks are availing this Guarantee Aim : 1) Simplified procedure

2) Higher coverage and

3) Lower premium rates

ExclusionsExclusions

• Option are available to exclude 1) Small Scale Industrial Units & 2) Public Sector Undertakings of Central Government

3) Post-shipment credit extended to L/c advances under WTPSG only

• However, advances sanctioned to those category are available under Individual Packing Credit Guarantee

ComplianceCompliance

• Declarations: Consolidated statements of all their accounts by each branch of the bank where the advances are sanctioned.

• Premium is calculated based on the Average Daily product

• Payable on an account till outstanding is fully liquidated/ default on the account

reported to ECGC, whichever is earlier

Extending the due date Extending the due date

• Bank at its discretion can extend the period of liquidation of PC advance up to 360 days without ECGC approval.

• Beyond the 360 days extensions can be given by the Bank with ECGC approval if the borrower is creditworthy and recovery of PC advance is possible in the normal course of submitting bills.

• Further advances can be granted by the Bank unless otherwise specified by ECGC.

Report of Default (ROD)Report of Default (ROD)

• In case no extension is permitted by the bank, beyond the due date or extended due date, they shall submit the Report of Default.

• Within 4 months from due date / extended due date of advance bank shall submit Report of Default.

• When the advances recalled from the exporter, bank shall submit report of default within one month from date of recall.

Follow up after Report of Follow up after Report of DefaultDefault

•Banker may like to regularise the account through Nursing programme / repayment schedule offered by the borrower.

•Bank should stop sanctioning of all advances.

•Bank may call back the advance and initiate legal action.

•Bank may take all precaution aimed at minimising loss.

Action to be taken before Action to be taken before submission of Claim form. submission of Claim form.

• Bank shall recall all the advances, A defaulter in one account is to be treated as defaulter with other credit facilities.

• Recall Notice shall be issued to all concerned by the bank ( Legal notice from bank’s solicitor).

• Bank shall take all action to minimise the loss like disposing of stocks, other securities etc.

Claim preferred by BankClaim preferred by Bank

• Bank shall lodge the claim within 6 months from date for report of default.

•Time period can be extended on specific request. Otherwise any claim received later will be time barred

•Minimum period for settlement of claim will be 4 months from the due date/ extended due date, irrespective of report of default

RecoveriesRecoveries

• Bank shall pursue recovery action for full amount due from the exporter including claim amount

• All recovery expenses will be adjusted on the actual amount of recovery and the balance shall be shared in the same proportion of claim payment.

Modifications implementedModifications implemented

I. Simplified procedures for claims up to Rs. 25 lakhs

If claim is prima-facie payable • Certificate of compliance of all guarantee

conditions from the controlling office of the bank branch.

• However, representation cases shall not be considered under the simplified

procedure.

II. ON-ACCOUNT PAYMENT OF CLAIMS II. ON-ACCOUNT PAYMENT OF CLAIMS BEYOND RS.25 LAKHSBEYOND RS.25 LAKHS

Purpose:• To reduce the blocked funds of the bank on

account of non payment by the borrower. (Reduction of NPA to some extent)

• It is observed bank takes more time in submitting documents and other relevant information when the value of claim is large.

• It may be due to some complications and ECGC also requires time for scrutiny.

ON-ACCOUNT PAYMENT OF CLAIMS ON-ACCOUNT PAYMENT OF CLAIMS BEYOND RS.25 LAKHS - contd.BEYOND RS.25 LAKHS - contd.

Features:1) Claim should be prima-facie admissible.2) Procedural formalities of the Guarantee

to be complied with as mentioned earlier.3) This facility shall be made available only

on request from the bank along with an undertaking to refund the amount in full if the case is rejected or any excess payment.

ON-ACCOUNT PAYMENT OF CLAIMS ON-ACCOUNT PAYMENT OF CLAIMS BEYOND RS.25 LAKHS - Contd.BEYOND RS.25 LAKHS - Contd.

Features: contd.

4) Amount shall be 50% of claim admissible.

5) On-account payment not to be construed as admissibility of claim preferred.

6) No on-account payment to be considered on representation cases.

• Bank to refund the amount within 30 days of receipt of demand from the Corporation.

PROVISIONAL PAYMENTPROVISIONAL PAYMENT

• APPLICABLE TO PS GUARANTEE

• WHERE EXPORTER IS POLICYHOLDER

• SINGLE OR FEW BILLS REMAIN UNPAID ( BUYER’S DEFAULT )

• PROVISIONAL PAYMENT UP 20% OF PS LIMIT

PROVISIONAL PAYMENTPROVISIONAL PAYMENTCONTD….CONTD….

• CLAIM TO BE PREFERRED AFTER 60 DAYS BUT BEFORE 180 DAYS FROM DUE DATE

• REPAYMENT

>CLAIM UNDER POLICY

>RECOVERY FROM BUYER

>RECOVERY FROM EXPORTER

““Provisional payment” under post-Provisional payment” under post-

shipment Guarantee - Contdshipment Guarantee - Contd..Benefit of "provisional payment”1) Bank can continue to operate the account

and cover will be available subject to terms and conditions of the guarantee. The full limit can be made available (exposure for the corporation more to the extent of “provisional payment”)

2) Exporter will not be placed under SAL at this stage.

SERIOUS LAPSES – SERIOUS LAPSES – GUARANTEE CLAIMSGUARANTEE CLAIMS

• Granting advances without approval to exporters in SAL

• Non-compliance with sanction terms relating to obtention of collateral

• Fresh sanction to an account already defaulted without approval

• Fresh sanction to an account (defaulted sister concern account) without approval

Lapses contd…..Lapses contd…..

• Advances granted to liquidate overdue advances in an irregular account not covered by the Corporation

• Releasing of Collateral after occurrence of default

• Not taking approval as required under the guarantee

Other DevelopmentsOther Developments

• Premium rationalization• Wide area network• E- connectivity• Branch expansion• Bancassurance arrangements• Sales promotion agents• Tie-up with National Insurance• Review of classification of countries• Streamlining claim procedures

•THANK YOU