Ecgc regarding

RAMESH KUMAR VERMA ( CS PURSUING ) (43853 Points)

03 December 2011  

 

What is ECGC?
 

Export Credit Guarantee Corporation of India Limited, was established in the year 1957 by the Government of India to strengthen the export promotion drive by covering the risk of exporting on credit.
 

Being essentially an export promotion organization, it functions under the administrative control of the Ministry of Commerce & Industry, Department of Commerce, Government of India. It is managed by a Board of Directors comprising representatives of the Government, Reserve Bank of India, banking, insurance and exporting community.
 

ECGC is the fifth largest credit insurer of the world in terms of coverage of national exports. The present paid-up capital of the company is Rs.800 crores and authorized capital Rs.1000 crores.
 
 

What does ECGC do?
 

Provides a range of credit risk insurance covers to exporters against loss in export of goods and services
 

Offers guarantees 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
 
 

How does ECGC help exporters?
 

ECGC

 

Offers insurance protection to exporters against payment risks
 

Provides guidance in export-related activities
 

Makes available information on different countries with its own credit ratings
 

Makes it easy to obtain export finance from banks/financial institutions
 

Assists exporters in recovering bad debts
 

Provides information on credit-worthiness of overseas buyers
 

 

Need for export credit insurance
 

Payments for exports are open to risks even at the best of times. The risks have assumed large proportions today due to the far-reaching political and economic changes that are sweeping the world. An outbreak of war or civil war may block or delay payment for goods exported. A coup or an insurrection may also bring about the same result. Economic difficulties or balance of payment problems may lead a country to impose restrictions on either import of certain goods or on transfer of payments for goods imported. In addition, the exporters have to face commercial risks of insolvency or protracted default of buyers. The commercial risks of a foreign buyer going bankrupt or losing his capacity to pay are aggravated due to the political and economic uncertainties. Export credit insurance is designed to protect exporters from the consequences of the payment risks, both political and commercial, and to enable them to expand their overseas business without fear of loss.

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