7/28/2019 unit_2_8_ecgc

1/31

INTERNATIONAL BUSINESS

MANAGEMENT

4/1/2013 a.velsamy, sona school of management 1

ECGC

7/28/2019 unit_2_8_ecgc

2/31

A PRESENTATION ON

THE CREDIT INSURANCEPRODUCTS

7/28/2019 unit_2_8_ecgc

3/31

EXPORT CREDIT INSURANCE

Credit Insurance Covers to exporters against Credit Risk losses in export ofgoods & services both under Short term and Medium and LT

CreditInsurance covers to banks to protect them against risks of nonpayment by exporters both under Short term and Medium and LT

Domestic Credit Insurance covers toExporters and Banks in respect oftheir local sales and working capital finance, respectively

Overseas Investment Insurancecovers to protect Indian Entrepreneursinvesting in Overseas Ventures (Equity/Loans) against expropriation risks

Exchange Fluctuation Covers to exporters to protect them in respect oftheir exchange losses under Medium and LT exports

7/28/2019 unit_2_8_ecgc

4/31

ECGC An Export Promotion Institution

Provides credit risk covers to Exporters against non

payment risks of the overseas buyers / buyers country in

respect of the exports made.

Provides credit Insurance covers to banks against lending

risks of exporters

Assessment of buyers for the purpose of underwriting

Preparation of country reports

International experience to enhance Indian capabilities An ISO organisation excelling in credit insurance services

7/28/2019 unit_2_8_ecgc

5/31

VISION

To excel in providing credit insurance and trade-related

services.

MISSION

To support the Indian Export Industry by providing cost-

effective insurance and trade-related services to meet thegrowing needs of the Indian export market through the

optimal utilization of available resources.

7/28/2019 unit_2_8_ecgc

6/31

A Brief Profile of ECGC

No. of offices 5 Regional offices and 51 Branches

( Head office and all Branches ISO certified)

Paid Up Capital Rs 900 Cr

Reserves Rs 913.42 Cr

IRDA registered Insurance company classified under General Insurance-Specialised Institution

Data for 2007-08 Premium Income Rs 668.36 Cr

Claims paid Rs 419.74 Cr

Recoveries Rs 161.50 Cr

No. of Policies in force 12533

No. of shipments covered 364848

No. of buyers covered 46799 No. of countries covered 193

No. of banks holding covers 65

No. of bank branches covered 3709

No. of exporters financed by banks 20568

7/28/2019 unit_2_8_ecgc

7/31

Statistics

Particulars Initial Years (1957-60) 2007-08

Premium Rs 43,109 (1957-58) Rs 668.36 crores

Claims Rs 4.51 lacs (1960) Rs 419.74 crores

Recoveries Rs 2.00 lacs (1960) Rs 161.50 crores

Value of

shipments

covered

Rs 1.30 crores(1957 -58) Rs 52766.57 crores

Policies in Force 146 no. (1957-58) 12533 no.

No. of bankscovered under

Guarantees

3 no. (1960) 65

No. of bank

branches

3 no. 3709 no.

Paid up Capital Rs 50.00 lacs Rs 900 crores

7/28/2019 unit_2_8_ecgc

8/31

Payment Risk

EXPORT INSURANCE

Goods Receivables

Exchange

Risk

Loss or

Damage

Marine

Insurance

Hedging by

Authorized

Dealers

CREDITINSURANCE

7/28/2019 unit_2_8_ecgc

9/31

LC

RISKS

POLITICAL RISK

(Open Cover

and

Restricted cover )

COUNTRYBUYER BANK

LC / NON LC

COMMERCIAL RISK

Risks Covered by ECGC

7/28/2019 unit_2_8_ecgc

10/31

RISKS COVERED

COMMERCIAL RISKS

Insolvency of buyer/LC opening bank

Protracted Default of buyer Repudiation by buyer

POLITICAL RISKS

War/civil war/revolutions

Import restrictions Exchange transfer delay/embargo

Any other cause attributable to importing country

7/28/2019 unit_2_8_ecgc

11/31

Products offered to Exporters Standard Policy

Small Exporters policy

Specific Shipment Policy (short term)

Export Turnover policy

Specific buyer wise policy

Consignment export policy Global entity policy

Single buyer exposure policy

Multi buyer exposure policy

Software project exports policy

IT enabled (single customer) policy

IT enabled (multi customer) policy

SME Policy

Customer specific policy (Tailor made)

7/28/2019 unit_2_8_ecgc

12/31

Shipments ( Comprehensive Risks)Policy

Whole Turnover principle- all exports covered

Selective options for LC/Associates/Consignments 90% cover

Advance Premium subject to Minimum premium ofRs.10,000/-

Policy Period - 2 years

Credit limit (Drawee wise) on all the buyers Monthly declarations with premium due

Premium rates schedule issued with Policy

No claim Bonus every year 5% subject to maximum of50%

7/28/2019 unit_2_8_ecgc

13/31

Small Exporters Policy Export turnover not exceeding Rs.50 Lakhs per

annum

Advance Premium subject to Minimum PremiumRs.2000/-

Policy Period - one year Cover for Commercial risks 95% and

Political risks 100%

No Claim bonus applicable

Quarterly Declarations

Premium payment as per standard premiumschedule attached to Policy

7/28/2019 unit_2_8_ecgc

14/31

Export Turnover Policy

Minimum anticipated Premium of Rs.10 Lakhs

Period of Policy- One year

Monthly or quarterly declaration as per exporters choice

Higher Discretionary Limit of drawee wise limits on buyers

(uptoRs100 lakhs for DP and Rs50 lakhs for DA)

Premium rates discounted by 20%

Premium payable upfront or in Quarterly instalments basedon anticipated exports

5% cash discount for upfront payment of full annual premium

7/28/2019 unit_2_8_ecgc

15/31

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 later

7/28/2019 unit_2_8_ecgc

16/31

Specific Buyer wise Policy

Covering One buyer / One Bank

Processing fee Rs.1000/-

Period of cover - One year

All shipments to buyer on Non LC terms orshipments under LC from bank covered

Quarterly/Annual premium payable upfront basedon projected exports

80% cover Monthly or quarterly shipment statements

5% No Claim Bonus reduction on renewal

7/28/2019 unit_2_8_ecgc

17/31

Buyer Exposure Policy

Cover issued on exposure basis as opposed to turnover (Exposure: Likely outstanding at any given point of time)

One time payment of premium on exposure

Single Premium rate based on country rating for Comprehensiverisks/Political risks

Processing fee Rs.1000/- on application

Cover is up to Exposure or the Loss limit (Credit Limit)

Premium payable either quarterly or annually on the loss limit

No monthly statements

Annual statement of shipments at the end of Policy period on renewal

Coverage is 80% Selective cover for each buyer at exporters discretion

7/28/2019 unit_2_8_ecgc

18/31

Multi buyer exposure policy Cover on exposure as opposed to turnover and cover for more than 1 buyer Discretion to choose buyers for cover with exporter and shall be acceptable to

ECGC

Processing Fee Rs.5000/- to accompany application

List of buyers to be given with proposal and any addition to be advised

Minimum 10% of projected turnover will be fixed as Aggregate Loss Limit (ALL)

which will be the Maximum Liability Exporter can opt for higher exposure than 10% of turnover

Cover for each buyer is 10% of ALL as Single Loss Limit (SLL)

Exporter to have access to ECGC website for checking defaulter buyer list.

Coverage is 80% and lower cover available with proportionate reduction ofpremium. Single premium rate irrespective of country grading

Upfront premium payable before issue or in quarterly instalments 5% No Claim Bonus reduction on renewal

7/28/2019 unit_2_8_ecgc

19/31

Consignment (Stock holding Agent) Policy

Consignment exports covered under this exclusive cover for a period of 1 year

Premium on shipments to the agent payable on the turnover

Upfront premium quarterly / annually

Coverage 80%. Exporters holding Standard Policy will get 90% cover

One Agent / Multiple buyers

Cover on agent or on ultimate buyers as desired by exporter Credit limits (Drawee wise limits) to be obtained on ultimate buyers

Discretionary Credit limit available upto 5% of turnover with max of Rs100lakhs

Longer period of 360 days for realization of bills

Premium payable on the basis of country classification and tenor of

90/180/360 days. Extension upto 540 days permissible with additionalpremium

5% No Claim Bonus reduction on renewal

7/28/2019 unit_2_8_ecgc

20/31

Consignment Exports (Global Entity) Policy

Coverage for selling goods through exporters own subsidiary or branch office

during a period of 1 year Premium on shipments to the GE payable on the turnover

Upfront premium quarterly / annually

Coverage 80%. Exporters holding Standard Policy will get 90% cover

One GE / Multiple buyers

Cover on GE or on ultimate buyers as desired by exporter

Commercial cover of Insolvency of GE only if Joint stock company and equitystake not exceeding 49%; Otherwise only Political risks cover

Credit limits (Drawee wise limits) to be obtained on ultimate buyers

Discretionary Credit limit available upto 5% of turnover with max of Rs100 lakhs

Longer period of 360 days for realization of bills

Premium payable on the basis of country classification and tenor of 90/180/360

days. Extension upto 540 days permissible with additional premium 5% No Claim Bonus reduction on renewal

7/28/2019 unit_2_8_ecgc

21/31

MSME POLICY

Policy issued for small exporters with ExportTurnover not exceeding Rs10 Lakhs andregistered under MSME Act, 2006

Cover available upto Rs10 lakhs with annualpremium of Rs 5,000 and a processing fee ofRs1,000

Cover available will be 90%

Maximum claim payable is Rs3 lakhs on anybuyer

No requirement of monthly declaration ofshipments

7/28/2019 unit_2_8_ecgc

22/31

EXPORT FACTORING SERVICES

Factoring services involving finance, credit protection,collection under one roof

Finance against export receivables facilitated through abank

Credit protection available after assessment of buyers Receivables financed without recourse

80% prepayment against invoices and balance after 90days from due date less charges, if payment not received

Details available on specific request at factoring@ecgc.in

7/28/2019 unit_2_8_ecgc

23/31

Export Credit Insurance Covers to Banks

Covers for working capital granted bycommercial banks to Exporters at Preshipment and Post shipment stages

Covers available on exporter wise, bankbranch wise and bank wise

Losses due to protracted default /Insolvency of exporters covered

Cover varies from 60% to 95% depending onthe type of cover

7/28/2019 unit_2_8_ecgc

24/31

Export Stimulus Package

Additional cover of 5%, subject to maximum protection of95% available for all MSME exporters

All exporters of Textiles ( including handicrafts andhandlooms), Gem & jewellery, leather, engineering goods,carpets, project goods, auto components and chemicals will

also get the additional protection of 5% Additional cover through the National Export Insurance

Account of the GOI

Bank advances to MSME borrowers for exports will get anadditional protection of 10% subject to maximum protection

of 85% under the Credit Insurance covers to banks Additional cover available for shipments /advances made/

granted during the period 1st Jan 09 to 30th June 09

7/28/2019 unit_2_8_ecgc

25/31

4/1/2013 a.velsamy, sona school of management 25

7/28/2019 unit_2_8_ecgc

26/31

7/28/2019 unit_2_8_ecgc

27/31

7/28/2019 unit_2_8_ecgc

28/31

7/28/2019 unit_2_8_ecgc

29/31

7/28/2019 unit_2_8_ecgc

30/31

7/28/2019 unit_2_8_ecgc

31/31