Ecgc charges

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amarnath gupta (Querist)
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21 January 2014 what is an ECGC charges when we export goods? what is the nature and procedure? and is there any difference between ECGC charges and ECGC premium?

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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21 January 2014 Export Credit Guarantee Corporation of India Ltd. ( ECGC ) is a Government of India Enterprise which provides export credit insurance facilities to exporters and banks in India. It functions under the administrative control of Ministry of Commerce & Industry, and is managed by a Board of Directors comprising representatives of the Government, Reserve Bank of India, banking , insurance and exporting community. Over the years, it has evolved various export credit risk insurance products to suit the requirements of Indian exporters and commercial banks. ECGC is the seventh largest credit insurer of the world in terms of coverage of national exports. The present paid up capital of the Company is Rs. 1000 Crores and the authorized capital is Rs. 1000 Crores.

ECGC is essentially an export promotion organization, seeking to improve the competitive capacity of Indian exporters by giving them credit insurance covers comparable to those available to their competitors from most other countries. It keeps it's premium rates at the lowest level possible.

What does ECGC do?
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Provides a range of credit risk insurance covers to exporters against loss in export of goods and services
Offers Export Credit Insurance covers to banks and financial institutions to enable exporters to obtain better facilities from them
Provides Overseas Investment Insurance to Indian companies investing in joint ventures abroad in the form of equity or loan.

ecgc chages and premium
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Prevention is better than cure. If your debt had never impacted your business, it does not cost much to protect yourself against catastrophic losses. Should it have impacted, and if you were to buy credit insurance, then the premium will be much higher.

Even though you may have a clean loss history, it is no guarantee that losses could not be made in the future. Of course a clean loss history will be reflected in the advantageous premium rate we would offer.

No one can be entirely sure about their own market. When it moves fast, it becomes less predictable. Credit insurance is a way to streamline your P&L. You pay a reasonable premium each year and you avoid that 'big hit'.