The ECGC Limited is a company wholly owned by the Government of India based in Mumbai, Maharashtra. It provides export credit insurance support to Indian. Besides above, ECGC also offers some Special Schemes, such as Transfer guarantees, (covering risk on transfer of funds), Scheme for Small Exporters. Special Schemes – ECGC. Suitability. Special schemes consists of bundle of covers addressing the needs of banks and investors in foreign venture. This apart .
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When a bank in India adds its confirmation to a foreign Letter of Credit, it binds itself to schems the drafts drawn by the beneficiary of the Letter of Credit without any recourse to him provided such drafts are drawn strictly in accordance with the terms of the Letter of Credit.
The Transfer Guarantee seeks to safeguard banks in India against losses arising out of such risks. It is, therefore, the appropriate policy for an exporter to take if the payments are open to ecg commercial and political risks.
The types of guarantees issued by Indian bank are: The overseas investment may be made either by way of equity or by way of loans. This will go a long way in providing cost effective credit insurance support to Project exporters which in turn will enable them to compete effectively for international tenders. Premium rates for Contract Policies will be higher than that for Shipment Policies. Standard Policy Shipments Comprehensive Risks Policy, which is commonly known as the Standard Policy, is the one ideally suited to cover risks in respect of goods exported on short term credit; i.
The cover would be available for the original investment together with annual dividends or interest receivable. The Exchange Fluctuation Risk: The eecgc bank will suffer a loss fcgc the foreign bank fails to reimburse it with the amount paid to the exporter.
Income from the premium is allocated over the tenor of the cover extended. The balance amount should be repayable in equal semi-annual instalments commencing six echc after the schemr of shipment.
This also can be either for political or comprehensive risks. An outbreak of war or civil war may block or delay payment for goods exported. In addition to the policy covers, which are issued to exporters, ECGC also extends its guarantee support to banks in India against both funded and nonfunded facilities extended to Project Exporters.
However, it would be in the interest of Project exporters to obtain ‘In – Principle’ clearance from their bankers and ECGC assuring them of support in the event of their securing the contracts.
This apart loss on account of exchange rate fluctuations are also provided for. For investment in any country to qualify for investment insurance, there should preferably be a bilateral agreement protecting investment of one country in the other.
For further details go to http: The investment may be either in cash or in the form of export of Indian capital goods and services. Applicable premium rates The premium rates will depend on the country to which exports are to be made and the repayment period.
The scope for disputes is very large. It covers exchange fluctuation risk of exporters of capital goods, civil engineering contractors and consultants who may have to receive foreign currency payments over a period of years for their exports, construction works or services. No further premium is payable if the exporter is not declared successful in the bid.
Any investment made by way of equity capital or untied loan for the purpose of setting up or expansion of overseas projects will be eligible for cover under investment schemd. The cover will be available for the original investment together with annual dividends or interest receivable.
Specific Shipments Political Risks Policy; 3. The bank will have to ensure that: If the additional investment is made out of retained profits, which are not eligible for repatriation such as investment will not be eligible for cover.
The loss or gain within a range of 2 percent of the reference rate will go to the exporter’s account. As the post-shipment guarantee is mainly intended to benefit the banks, the cost of premium in respect of the Whole Turnover Post-shipment Guarantee schemr out by banks may be absorbed by the banks and not passed on to the exporters.
Export Credit Guarantee Corporation of India
Features of this cover are:. Features of this cover are: MumbaiMaharashtraIndia. While the premium rate for Guarantee issued to cover bond relating to exports on short-term credit is 0. The commercial risks of a foreign buyer going bankrupt or losing his capacity to pay are aggravated due to the political and economic uncertainties.
To find out the premium payable for any particular contract, In order to be sure about the availability of the cover, exporters are advised to get in-principle approval of ECGC and obtain the premium rates well before concluding contracts.