ECGC Unviels Scheme to Provide Credit Risk Insurance Cover of up to 90 Percent for Small Exporters

Export Credit Guarantee Corporation of India, ECGC, has introduced a new scheme to provide enhanced export credit risk insurance cover of 90 percent to support small exporters. The scheme is likely to help a number of small-scale exporters who obtain export credit from banks that carry ECGC WT-ECIB coverage. This will also allow small exporters to explore new markets and consumers, and competitively diversify their present product assortment.

Addressing a press conference in Mumbai today, 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”. He also said that the company is expecting small companies to get export credit from banks, benefiting these industries greatly. Banks should provide more concessions. The net effect will be benefit to exporters, involving reduction in interest rate.

He also thanked Commerce ministry and said that a number of schemes and financial assistance policies have assisted the company recent years. "The countercyclical role provided by organisations like ECGC is analogous to that of a fireman; when credit is suffering, credit insurance agencies step in to stabilise the market," Senthilnathan said .

According to Senthilnathan, all governments took various measures to stabilise the market in light of COVID-19, as a result of which ECGC has not withdrawn cover given to exporters, and, contrary to expectations, export credit insurance agencies all over the world have witnessed only average levels of claim ratios, rather than high ratios. 

Enhanced Cover to Banks

• The enhanced cover will be available to manufacturer-exporters who have a fund-based export credit working capital limit of up to INR 20 Cr (i.e., total Packaging Credit and Post Shipment limit per exporter exporter-group), excluding the Gems, Jewellery, and Diamond sector and merchant exporters traders.
• This new scheme will allow banks holding ECGC's WT-ECIB cover to investigate the possibility of further lowering interest rates, benefiting all stakeholders. Because of its favourable claim premium ratio, the extended cover percentage will be made available to State Bank of India at the previous year's premium rate. Other banks, on the other hand, may see a small increase in the current premium rates.

ECGC provided export assistance totaling Rs.6.18 lakh crore in the fiscal year 2021-22. More than 6,700 distinct exporters benefited from direct cover granted to exporters as of March 2022, and more than 9,000 distinct exporters benefited from Export Credit Insurance for Banks (ECIB). Notably, approximately 96 of them are minor exporters.