EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

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WELCOME
TO A PRESENTATION ON

CREDIT RISK IN EXPORTS

AND
ROLE OF ECGC
BY SMT.ARPITA SEN
SENIOR MANAGER
Agartala
15.7.2010

You focus on exports.

You focus We
on exports. Wecover
cover the
therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

ECGC Mission

To support the Indian export

industry by providing cost effective
insurance and trade related
services to meet the needs of the
Indian exporters

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on exports. Wecover
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therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

OBJECTIVE of ECGC
To PROMOTE EXPORTS Mainly by

• Protecting Exporters against

COMMERCIAL & POLITICAL RISKS In realising export
proceeds

• Protecting Banks against RISK OF DEFAULT IN EXPORT

CREDIT

• Protecting Investors against POLITICAL RISKS in

Shareholders’ equity and loan In overseas investments

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You focus We
on exports. Wecover
cover the
therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

ECGC Fact sheet

Established in 1957
Fully owned by GOI
Under administrative control of MOCI
Capital Base
Highest ICRA rating of IAAA
5 Regional Offices and 51 Branch Offices
All Branches ISO 9001:2000 certified

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on exports. Wecover
cover the
therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Key Financial Indicators of ECGC

Figures in Rupees crores

2007-08 2008-09 2009-10

Particulars (Audited) (Audited) (Audited)

Premium
Income 668.36 744.68 812.99

Claims Paid 420.01 451.41 641.72

Recoveries
Made 161.50 208.58 133.31

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on exports. Wecover
cover the
therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

What is Credit Risk

• Definition: The potential that a debtor will fail to

meet its payment obligations in accordance with
agreed terms.

• Export credit risk:

a) Buyer related problems

b) Country related

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on exports. Wecover
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therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

RISK MANAGEMENT IN EXPORTS

Goods Receivables

Loss or Exchange PAYMENT RISK

Damage Risk

Marine Hedging by CREDIT

Insuranc Authorized INSURANCE
e Dealers

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on exports. Wecover
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therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Payment Risks
Payment Risks

POLITICAL RISK COMMERCIAL RISK

COUNTRY BUYER BANK

LC / NON – LC LC
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 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Risks covered -Political

War,
Civil
war, due to war
Diversion of voyage
Internal excha
disturba nge
nces
New import restrictions, transf
cancellation of import lic
er
blocka
ges/de
lay

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on exports. Wecover
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therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Risks covered- Commercial

Insolven
cy of
buyer/ba
nk Non
acceptan
ce of
exported
Default shipmen
of t
buyer/b
ank

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on exports. Wecover
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therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Risks NOT considered Credit risk

Non fulfillment of contractual obligations by exporter
including quality dispute.

Default or insolvency or any omission /commission of any

agent of exporter/ buyer

Failure of buyer to obtain necessary approvals for imports

Causes inherent in nature of goods

Exchange fluctuation risks

Physical loss/damage to goods

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on exports. Wecover
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therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Principles of Credit Insurance

• Good Faith

• Co-insurance

• Spread of risks

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 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Buyer & Country Underwriting

• The 2 pillars of Export Credit Insurance :

Buyer and Country

Underwriting Underwriting
that assesses that assesses
buyer risks country risks

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on exports. Wecover
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therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Products offered to Exporters

Declaration Based Policies

Whole Turnover
Specific transaction

1) Specific Shipment Policy

1) Standard Policy
2) Specific Buyer Policy
2) Small Exporters Policy
3) Transfer Guarantee (for Banks)
3) Export Turnover Policy

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on exports. Wecover
cover the
therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Products offered to Exporters

Exposure Based Policies

1) Single Buyer Exposure Policy

2) Multi buyer Exposure Policy

3) SME Policy

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on exports. Wecover
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therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Products offered to Exporters

Consignment Based Policies

1) Consignment Export Policy

2) Global Entity Policy

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on exports. Wecover
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therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Products offered to Exporters

Covers for IT/ITES industry
1) Software project exports policy

2) IT enabled (single customer) policy

3) IT enabled (multi customer) policy

Customised (Tailor Made) Policies

1) Customer Specific Policy

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on exports. Wecover
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therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Premium Structure Basis

• Country Grouping - 7 fold (237 countries)
( A1, A2, B1, B2,….. D)- Higher the country
group, lower the premum rates

• Terms of Payment- More superior the

payment terms, lower the premium rate

• Specific approval required for Restricted

Cover countries ( 33 countries )

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on exports. Wecover
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therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Shipments (Comprehensive Risks) Policy

Whole Turnover principle

Selective options for exclusion- LC/
Associates/ Consignments
90% cover
Minimum premium of Rs.10,000/-
Policy Period - 2 years
Buyer wise Credit limit
Discretionary limit
Monthly declarations No Claim Bonus – yearly 5%; max
50%

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on exports. Wecover
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therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Small Exporters Policy

• Export turnover not exceeding Rs.50 Lakhs p.a.
• Minimum Premium Rs.2000/-
• Policy Period - one year
• Higher percentage of cover-
Commercial risks 95%; Political risks 100%
• No Claim bonus
• Quarterly Declarations

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on exports. Wecover
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therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

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

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 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

SME POLICY
• For exporters with Export Turnover not
exceeding Rs10 Lakhs and registered under
MSME Act, 2006
• Cover available upto Rs10 lakhs.
• Annual premium Rs 5,000 and processing fee
of Rs1,000
• 90% cover
• Maximum claim payable is Rs3 lakhs on any
buyer
• No requirement of monthly declaration of
shipments

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on exports. Wecover
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 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

Export Credit Insurance Covers to Banks

• Covers for working capital granted by
commercial banks to Exporters at Pre shipment
and Post shipment stages
• Covers against non-fund based facilities for
exports.
• Covers available on exporter wise, bank branch
wise and bank wise
• Losses due to protracted default / Insolvency of
exporters covered
• Cover varies from 60% to 90% depending on the
type of cover

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on exports. Wecover
cover the
therisks.
risks.
 EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

In the Service of Exporters and

Banks since 1957

Thank You
Please visit us at: www.ecgc.in

: kolkata@ecgc.in;ero@ecgc.in
You focus on exports.
You focus We
on exports. Wecover
cover the
therisks.
risks.