export credit insurance project

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 a 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, one has to contend with the usual

commercial risks of insolvency or protracted default of buyers. The commercial risks

of the foreign buyer going bankrupt or losing his capacity to pay are heightened due

to the political and economic uncertainties. Conducting export business in such

condition of uncertainty is fraught with dangers.

The loss of a large payment may spell disaster for any exporter whatever his prudence

and competence. On the other hand, too cautious an attitude in evaluating risks and

selecting buyers may result in loss of hard-to-get business opportunities. 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.

Export credit insurance also seeks to create a favorable climate in which exporters can

hope to get timely and liberal credit facilities from banks at home. For this purpose,

export credit insurer provides guarantees to banks to protect them from the risk of loss

inherent in granting various types of finance facilities to exporters. There some of the

companies providing Export Credit Insurance in India.

Export Credit Insurance (ECGC)

Need for Export credit insurance

Payments for exports are open to risks even at the best of times. The risks have been

assumed large proportion today due to far reaching political and economic changes

that are sweeping the world. An outbreak of war may block or delay the payment for

goods exported. A coup or an insurrection may also bring about the same result.

Economic difficulties or the balance of payment problem may lead a country to

impose restrictions on either import of certain goods or on transfer of payments for

goods imported. In addition, one has to contend with the usual commercial risks of

insolvency or protracted default of buyers. The commercial risks of the foreign buyer

going bankrupt or losing his capacity to pay are heightened due to the political &

economic uncertainties. Conducting export business in such conditions of uncertainty

is fraught with dangers. 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.

The loss of a large payment may spell disaster for any exporter, whatever his

prudence and competence. On the other hand, too cautions an attitude in evaluating

risks and selecting buyers may result n loss of hard-to-get business opportunities.

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.

Export credit insurance also seeks to create a favorable climate in which exporters can

hope to get timely and liberal credit facilities from banks at home. For this purposes,

export credit insurer provides guarantees to banks to protect them form risk of loss

inherent in granting various types of finance facilities to exporters.

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

Customers focus on export. ECCG cover the risks. 2


way to streamline your P&L. You pay a reasonable premium each year and you

avoid that 'big hit'.

If there is an impending risk, it will be too late to buy credit insurance. Even with a

well-balanced portfolio, you cannot predict an unexpected claim or catastrophic loss.

Unfortunately unforeseen catastrophes do exist e.g. Fraud of a manager that causes a

company to go insolvent or secondary insolvency, which means the insolvency of a

major buyer of your client that, affects your client's business. You can never be

absolutely sure that you have all the information.



INTRODUCTION ON ECGC

Exporters face a problem of not being paid by the overseas importer because of

various reasons like out break of war or civil war, a coup or an insurrection, economic

difficulties or balance of payment problems faced by importers country and

commercial risks like insolvency or protracted default of buyer. All these reasons may

block the amount or delay the amount. The loss of amount brings a disaster for any

exporter however he is financially sound, intelligent and competent. Export credit

insurance provided by ECGC helps in preventing the above risks. With insurance

cover, exporters can do business confidently and in the process can increase or expand

the business significantly with out fear of loss. This paper examines export insurance

system in the country and the role played by ECGC. Governments are keen to

promote exports because exports improve a country’s balance of payments position.

For this reason, governments in various countries provide export insurance cover

through government or the quasi- governmental organizations.

The Risks covered by the export insurance organizations usually include the

following:-

Insolvency of the buyer;

Buyer’s failure to pay on the due date ;

Action by other governments to block the transfer of funds;

Action by other governments to confiscate the goods;

Wars, revolutions and other similar disturbances within the importing country;

Political events and economic difficulties.

Payments for exports are open to risks even at the best of times. The risks have

assumed larger proportions due to political and economic changes in the world. A

civil war in a country may block or delay the payment for exports. Economic

difficulties or BOP position may also force a country to restrict payments outflow to

the exporter. It is also possible tat the buyer may turn insolvent or may refuse to make

the payment. In light of the above, the export business though may appear lucrative is

fraught with risks.

The government of India set up the export Risks Insurance Corporation (ERIC)

in July 1957 in order to provide export credit insurance support to Indian

exporters. It was transformed into Export Credit Guarantee Corporation of India



Limited in 1983. ECGC is a company wholly owned by Government of India. It

functions under administrative control of the ministry of the commerce and is

managed by Board of Directors representing Government, Banking, Insurance, Trade,

Industry etc. ECGC is the fifth largest credit insurer of the world presently covers

17.31% of India’s total exports with the paid up capital of Rs. 1.50 bn. The present

paid-up capital of the company is Rs.800 crores and authorized capital Rs.1000

crores.



OBJECTIVES

In furtherance of the Mission, the Corporation has set before itself the following

objectives

1. To encourage, facilitate and develop trade between India and other countries.

2. To provide adequate export credit insurance cover, comparable to similar

covers available to exporters in other countries so that Indian exporters would

be able to save themselves from losses that may arise due to credit risks both

commercial and political and also are in a position to maximize their export

business.

3. To provide the banks in India with guarantee covers with a view to enabling

those to extend adequate export credit facilities to the Indian exporters both at

pre-shipment and post-shipment stage.

4. To provide investment insurance to Indian investors undertaking investments

in foreign countries.

5. To operate the various schemes in such a manner that the Corporation would

generate enough surpluses to enable it to meet any losses that may result from

unforeseen political situations.

6. To introduce new product lines so as to diversify into trade related services.

VISION

The vision of Export Credit Guarantee Corporation of India Ltd. is to excel in

providing export credit insurance and trade related services.

MISSION

The Mission of ECGC is to support the Indian Export Industry by providing cost

effective insurance and trade related services to meet the needs of Indian export

market and in doing so, generate an adequate return for our shareholders.



MAJOR FUNCTIONS OF ECGC

1. To provide a range of credit risk insurance covers to exporters against a loss in

export of goods and services.

2. To offer guarantees to banks and financial institutions to enable exporters

obtain better facilities from them.

3. Provides Overseas Investment Insurance to Indian companies investing in

joint ventures abroad in the form of equity or loan

ECGC HELPS EXPORTERS BY

1. Provide insurance protection to exporters against payment risks.

2. Provide guidance in export related activities.

3. Provide information on creditworthiness of overseas buyer.

4. Provide information on about 180 countries with its own credit ratings.

5. Making it easy to obtained export finance from banks/financial institutions

6. Assist exporters in recovering bad debts.

THE NEED FOR A POLICY

Payment for goods shipped by an exporter is open to certain risks, unless the

payment has been received in advance or is supported by an irrevocable L/C

confirmed by the bank India. Failure of a large payment can wreck an

exporter’s business.

In any case, the existence of the risks and the exporter’s knowledge of their

existence may make him adopt a very cautions attitude towards new business.

Orders which could have proved beneficial may be given up because of

excessive caution.

An ECGC policy is designed to protect exporters from losses that may rise due

to a variety of commercial and political risks which are beyond their control,.

Backed by this insurance, an exporter can expand his business by taking on

new buyers, entering new markets or by taking up new products.



The ECGC covers can be divided broadly into four groups:-

Standard Policies issued to:-

Exporter to protect them against payment risks involved in exports on short-

term credit; and

Small exporter’s policy to protect them against payment risks involved in

exports on short-term credit.

Specific Policies designed to protect Indian firms against payment risks involved

in:-

Export on deferred terms of payment;

Services rendered to foreign parties; and

Construction works and turnkey projects undertaken abroad.

Financial guarantees issued to

Banks in India to protect them from risks of loss involved in extending their financial

support to exporters at the pre-shipment as well as post-shipment stages; and

Special schemes viz.

Transfer Guaran-tee meant to protect banks which add confirmation to letters of

credit, Overseas Investment Insurance and Exchange Fluctuation Risk Insurance.



PRODUCTS AND SERVICES

CREDIT INSURANCE POLICIES

SCR or Standard Policy

Shipments (Comprehensive Risks) Policy, commonly known as the

Standard Policy, is the one ideally suited to cover risks in respect of

goods exported on short-term credit, i.e. credit not exceeding 180 days.

This policy covers both commercial and political risks from the date of

shipment. It is issued to exporters whose anticipated export turnover

for the next 12 months is more than Rs.50 lacs. (The appropriate

policy for exporters with an anticipated turnover of Rs.50 lacs or less is the Small

Exporter's Policy, described separately).

Risks covered under the Standard Policy

Under the SCR, ECGC covers, from the date of shipment, the following risks:

Commercial Risks:

1. Insolvency of the buyer;

2. Failure of the buyer to make the payment due within a specified period,

normally 4 months from the date;

3. Buyer’s failure to accept goods, subject to certain conditions.

Political Risks:

1. Imposition of restrictions by the Government of the buyer’s country or any

Government action which may block or delay the transfer of payment made

by the buyer;

2. War, civil war, revolution or civil disturbances in the buyer’s country; New

import restrictions or cancellation of a valid import license;

3. Interruption or diversion of voyage outside India resulting in payment of

additional freight or insurance charges which cannot be recovered from the

buyer.

4. Any other cause of loss occurring outside India not normally insured by

general insurers, and beyond the control of both the exporter and the buyer.

Risks not covered under the Standard Policy

1. Commercial disputes including quality disputes raised by the buyer unless the

exporter obtains a decree from a competent court of law in the buyer’s country

in his favor;



2. Causes inherent in the nature of goods;

3. Buyer’s failure to obtain necessary import or exchange authorization from

authorities in his country;

4. Insolvency or default of any agent of the exporter or of the collecting bank.

5. Loss or damage to goods which can be covered by general insurers;

6. Exchange rate fluctuation;

7. Failure of the exporter to fulfils the terms of the export contract or negligence

on his part.

Shipments covered under the Standard Policy

The Standard Policy is meant to cover all the shipments made by an exporter, on

credit terms during the period of 24 months after the issue of the policy. In other

words, an exporter is required to offer for the cover of the policy each and every

shipment that may be made by him in the next 24 months on DP, DA or Open

Delivery terms to all buyers other than his own associates.

Shipments excluded

An exporter may exclude shipments made against advance payment or those, which

are supported by irrevocable Letters of Credit, which carry the confirmation of banks

in India, since he faces no risk in respect of such transactions. Exporters of the status

of trading houses and above are allowed to exclude shipments of specified

commodities or shipments to buyers in specified countries or any combination of

these two, from the purview of the Standard Policies held by them.

Shipments against letter of credit

Exporters holding Standard Policy may opt to get shipments against irrevocable Letter

of Credit excluded from the scope of the policy. However, unless they are confirmed

by banks in India, payment under irrevocable Letters of Credit is subject to political

risks. For such shipments, an exporter has option to obtain cover for either political

risks only or for comprehensive risks, i.e., for all political risks and the risk of

insolvency or default of the bank opening the irrevocable Letter of Credit. The

comprehensive risk cover also provides indemnity to the exporter to the extent of 25%

of the gross invoice value if the LC opening bank refuses payment on the ground of

discrepancies in LC, which are not clearly attributable to the exporter. In either case,

cover will be provided by ECGC only if the exporter agrees to get all the shipments

made against irrevocable Letter of Credit covered under the policy. Cover will not be

available for selected transactions.



Shipments are associates

Shipments to foreign buyers who are associates of the exporters, i.e. in whose

business the exporter has a financial interest, are normally excluded from the policy.

They can, however be, covered against political risks under the policy if an exporter

so desires. Where both the exporter and the associate are public limited companies

and where the exporter's share holding in the associate does not exceed 49%, cover

can be provided against insolvency risks in addition to the political risks.

Shipments on consignment basis

Shipments made to overseas agents under consignment basis are excluded from the

scope of the Standard Policy. However, if an exporter wants it, the ECGC can get

them included under the policy, but the cover will be provided only against political

risks, since the agent acts for the exporter, if however, goods are sold to ultimate

buyers on credit term, comprehensive risks cover can be provided for the sales to such

ultimate buyers if the exporter wants such cover.

Air shipments

When shipments are made by air, the buyers are often able to obtain delivery of the

goods from the airlines before making payment of the bills or accepting them for

payment, as the case may be. Earlier such shipments could be covered only if the

exporter was holding appropriate credit limit on open delivery (OD) terms and had

paid premium at the higher rates applicable for OD. ECGC has now decided that

credit limits sanctioned under DA will be valid for OD also. Moreover, for shipments

made after 1st April, 2003, the premium rates for DA will apply for OD also. As a

result, shipments by air can be covered by the Standard Policy if the exporter holds a

valid credit limit under DA and pays premium at the rates applicable for the relevant

credit period under DA.

Additional cover for shipments to government Buyers

All shipments made to government buyer are covered under the policy against

political risks. The exporter has, therefore, to declare such shipments to the ECGC

and pay premium at the rates applicable for the covering political risks. The ECGC‘s

Specific Approval is required to be obtained where the country is in the list of

Restricted Cover Countries. This cover does not extend to commercial risks like

default or non-acceptance of goods. If an exporter wants these risks also to be

covered, then he is required to write to the ECGC asking that risks number (xi)

described in the policy be also covered and should give information about the name



and address of the address of the buyer, the statues of the buyer and he details of the

contract. If the ECGC approves the request, the shipment concerned will be covered

against comprehensive risks if the exporter pays premium on those shipments at rates

applicable for comprehensive risks. ECGC considers following buyer as Government

Buyers:

A department of the central Government; and

If the buyer be a Government body like a Board, State Government,

Municipality or Government owned Corporations/ Companies, if the

performance of the contract is guaranteed by the Central Government

Contract cover

The standard policy provides cover only for the post- shipment stage i.e.; from the

date of shipment. Cover for pre-shipment losses which may be sustained by an

exporter due to impossibility of exporting goods already manufactured or purchased

for the reasons like ban on export of the item, restrictions on import of the item into

the buyer’s country or war, civil war, etc. are not covered under the policy because the

risk is very low in respect of raw materials, primary products, consumer goods or

consumer durables which can easily be resold. Where, however, the export involves

an item which is manufactured to the non-standard specifications of a buyer, cover

can be provided for the pre-shipment risks as well as the post-shipment risks by

means of an Endorsement to the Standard Policy.

Shipments made on credit exceeding 180 days are covered

The policy is meant to provide cover for shipments involving a credit period not

exceeding 180 days. In exceptional cases, however, cover may be granted for

shipments with longer credit period, provided that such longer credit periods are

justifiable for the export items concerned.

HOW THE RISKS ARE COVERED

Maximum Liability

The exporter has to get a credit limit approved from ECGC in respect of each foreign

buyer to whom he would like to make shipments on DP/DA/OD terms of payment. In

addition, if shipments are made to a buyer in some of the countries classified by

ECGC as restricted cover countries (see below for details), Specific Approval of

ECGC should be obtained for such shipment. Further, the exporter has to declare to

ECGC all his shipments and pay premium as explained later. As the Standard Policy

is intended to cover all the shipments that may be made by an exporter in a period of



24 months ahead, the ECGC will fix its Maximum Liability under each Policy. The

Maximum Liability for the shipments made by an exporter in each of the policy years.

To obtain the policy with maximum liability, exporters are advised to estimates the

maximum outstanding payments due from overseas buyers at any one time during the

policy period and convey it to ECGC. The

Credit limits on buyers

Commercial risks are covered under the policy only if a credit limit is approved by

ECGC on each buyer to whom shipments are made on credit terms. The exporter has,

therefore, to apply for a suitable credit limit on each buyer. On the basis of its own

judgement of the creditworthiness of the buyer, as ascertained from credit reports

obtained from banks and specialised agencies abroad, ECGC will approve the credit

limit which is the limit upto which it will pay claim on account of losses arising from

commercial risks on account of that buyer. The credit limit is a revolving limit and

once approved, it will hold good for all shipments to the buyer as long as there is no

gap of more than 12 months between two shipments. Credit limit is a limit on ECGC's

exposure on the buyer for commercial risks and not a limit on the value of shipments

that may be made to him. In case of losses due to political risks, ECGC's exposure is

not restricted by the credit limit. Premium has, therefore, to be paid on the full value

of each shipment even where the value of the shipment or the total value of the bills

outstanding for payment is in excess of the credit limit.

As the credit limit is indicative of the safe limit of credit that can be extended to the

buyer, the exporters are advised to see that the total value of the bills outstanding with

the buyer at any one time is not out of proportion to the credit limit. In cases where

the credit limit that ECGC is prepared to grant is far lower than the value of

outstanding bills, exporters may discuss the problem with ECGC officials.

Credit limits need not be obtained if a shipment is made on D.P. or C.A.D. terms and

if the value of the shipment does not exceed Rs. 10, 00,000. Political as well as

commercial risks will stand automatically covered for such shipments, the only

qualification been the claims will not be paid on more than two buyers during the

policy under this provision.

Charges for credit limit sanctioned

ECGC spends a considerable amount of money for obtaining reports on overseas

buyers from banks and credit information agencies abroad in order to assess their

credit standing and approves credit limits based on such assessment. ECGC charges a



status enquiry fee of Rs.500 for each credit limit application. An exporter need not

pay status enquiry fee for credit limits upto Rs.5 lac, if he furnishes a bank report not

older than 6 months on the buyer.

Status Enquiry Charges

In order to access the credit standing, ECGC obtain reports on overseas buyers from

banks and credit information agencies abroad and spends considerable amount for

obtaining such reports. The credit limits on buyers are based on such assessment.

ECGC charges a nominal fee for each credit limit application. If an exporter submits a

bank report not older than 6 months on the buyer, he need not pay any status enquiry

fee for credit limits up to Rs. 5, 00,000.

In case the limit is required urgently, exporters may request ECGC to obtain fax

report on the buyer and pay towards fax expenses. Alternatively exporter may obtain

cable report through his bank and furnish the same in original to ECGC for a quick

decision.

Restricted cover countries

For a large majority of countries, the Corporation places no limit for covering political

risks. Such countries are referred to as 'open cover' countries. More than 85% of the

countries in the world, which account for over 99% of the country's exports, are open

cover countries. However, in the case of certain countries where the political risks are

very high, cover is granted on a restricted basis. In respect of a majority of such

countries, revolving limits normally valid for one year are issued in place of credit

limits. The procedure for sanction of revolving limits is the same as for credit limits.

In respect of the few remaining countries under restricted cover, which are high risk

countries, specific approvals are given on the merits of each case. The period of

validity of the specific approval is six months.

Percentage of cover

ECGC normally pays 90% of the losses, whether it arises due to commercial risks or

political risks. The remaining 10% has to be borne by the exporter himself. However,

ECGC reserves the right to offer a lower percentage of cover in certain cases.

Premium an exporter has to pay

Premium payable will be determined on the basis of projected exports on an annual

basis subject to a minimum premium of Rs. 10,000 for the policy period. Cash

discount can be availed by the exporters paying premium upfront under the policies

(on quarterly / annually basis as the case may be under relevant policy @ 1% and 5%



respectively). Additional premium will have to be paid on the shipments declared by

the exporter after the minimum premium gets fully adjusted. No part of the minimum

premium will be refunded to the exporter if the premium payable on the actual

shipments falls below the amount of minimum premium.

Declaration of shipments and payment of additional premium

On or before the 15th of every month the policyholder is required to declare to ECGC

in a prescribed form, all the shipments made by him in the preceding calendar month.

If no shipment is made in a month, a NIL declaration should be sent. The premium is

required to be calculated by the exporter on the basis of schedule of premium given

by the ECGC along with the policy. The premium rates vary according to country

classification and the length of credit.

Premium rates

In order to facilitate the exporter’s, if there is no claim paid to the exporters during the

earlier policy period of 2 policy year , at the time of renewal , ‘no claims bonus

rates’ of 10% shall be offered to them. The maximum bonus rate offered to them is

50%.

Reduction allowed in the premium rates

If no claim is made on ECGC during a policy period of one year, a no-claim bonus of

5% is granted in the premium rates at the time of renewal of the policy. No claim

bonus can be accumulated for every policy period till a maximum bonus of 50% is

reached.

Exporter liable to pay premium

In respect of shipments to buyers on whom ECGC has refused credit limits, the

exporter will have the option of either paying premium for only political risks or not

paying any premium at all. If the full amount of credit limit asked for by an exporter

on a buyer is not sanctioned by ECGC, the exporter will have the option of paying

comprehensive premium on all shipments to the buyer (with the cover for commercial

risks restricted to the credit limit sanctioned, but cover for political risk to the full

extent) or paying premium for political risks only on all shipments or not paying any

premium for the shipments to that buyer under the Standard Policy.

Non-payment of the bill

In the event of non-payment of any bill by the foreign buyer by the due date, the

policyholder is required to take prompt and effective steps to prevent or minimize

loss. A monthly declaration of all bills which remain unpaid for more than 30 days



should be submitted to ECGC in the prescribed form indicating action taken in each

case. Prior approval of ECGC is required for granting extension of time for payment,

converting bill from DP to DA terms or resale of unaccepted goods at a lower price (if

the loss exceeds a certain limit).

Extending credit period or changing the tenor of the bills

It may sometimes become necessary for an exporter to extend the credit period of a

DA bill or to convert a DP bill into a DA bill in circumstances in which the buyer is

unable to meet the payment obligation as per the original tenor of the bill. Whenever a

policyholder wishes to grant such extensions or conversions for good reasons, he

should get the prior approval of ECGC and pay the necessary additional premium.

Premium rates and payment of premium

The ECGC has refused to approve credit limits and where cover has been provided at

the request of the exporter on shipments to associates and shipments made against

Irrevocable Letter of Credit.

In cases where an exporter obtains cover for shipments made on consignment basis

comprehensive cover for shipments made against Irrevocable Letter of Credit or

contracts cover (only in exceptional cases) or cover for shipments with a credit period

exceeding 180 days premium rates will be quoted while granting such cover.

Premium at comprehensive rates will be payable where additional cover is provided

for shipments made to government buyers.

Approval is taken for resale of unaccepted goods

The policyholder is obliged to take immediate and effective action to minimize the

possible loss if and when a buyer does not take delivery of the goods. If he wishes to

resell the goods to an alternate buyer or bring back the goods to India, approval of

ECGC is to be obtained only if the loss on account of resale or reshipment exceeds

25% of the gross invoice value. Notice of resale should be given to the original buyer

so that it would be possible to take legal action against him subsequently, if

considered necessary, for recovery of the loss.

Eligible for receiving payment of a claim under the Policy

A claim will arise when any of the risks insured under the policy materializes. If any

overseas buyer goes insolvent, the exporter becomes eligible for a claim one month

after his loss is admitted to rank against the insolvent's estate or after four months

from the due date, whichever is earlier. In case of protracted default the claim is

payable after four months from the due date. Claims in respect of additional handling,



transport or insurance charges incurred by the exporter because of interruption or

diversion of voyage outside India are payable after proof of loss is furnished. In all

other cases claim is payable after four months from the date of the event causing loss.

However, in case of exports to countries where long transfer delays are experienced,

ECGC may extend the waiting period and claims for such shipments are payable after

the expiry of such extended period.

Debt recovery

Payment of claims by the ECGC does not relieve an exporter of his responsibility for

taking recovery action and realizing whatever amount can be recovered. The exporter

should, therefore, consult ECGC and take prompt and effective steps for recovery of

the debts. For its part, ECGC will help the exporter by providing the name of a

reliable lawyer and/or debt collecting agency and by enlisting the help of India's

commercial representative in the buyer's country.

It is also to be noted that receipt of a claim from ECGC does not relieve an exporter

from obligations to the Exchange Control Authority for recovering the amount from

the overseas buyers.

Sharing recovery with ECGC

All amounts recovered, net of recovery expenses should be shared with ECGC in the

ratio in which the loss was originally shared. Receipt of a claim from ECGC does not

relieve an exporter from obligations to the Exchange Control Authority for recovering

the amount from the overseas buyers.

How to obtain a policy

The exporter should fill in a Proposal Form, which can be downloaded from here or

obtained from any of the ECGC offices and send it to the nearest ECGC office. He

should also confirm his acceptance of the premium rates, a schedule of which will be

given to him along with the Proposal Form and remit applicable premium.

Small Exporters Policy



The Small Exporter's Policy is basically the Standard Policy,

incorporating certain improvements in terms of cover, in order to

encourage small exporters to obtain and operate the policy. It is

issued to exporters whose anticipated export turnover for the

period of one year does not exceed Rs.50 lacs.

The small exporter the policy is basically the standard policy the

main feature of which are as follows:-

Period of Policy: Small Exporter's Policy is issued for a period of 12 months, as

against 24 months in the case of Standard Policy.

Minimum premium: Premium payable will be determined on the basis of projected

exports on an annual basis subject to a minimum premium of Rs. 2000/- for the policy

period. No claim bonus in the premium rate is granted every year at the rate of 5% (as

against once in two years for Standard Policy at the rate of 10%).

Declaration of shipments: Shipments need to be declared quarterly (instead of

monthly as in the case of Standard Policy).

Declaration of overdue payments: Small exporters are required to submit monthly

declarations of all payments remaining overdue by more than 60 days from the due

date, as against 30 days in the case of exporters holding the Standard Policy.

Percentage of cover: For shipments covered under the Small Exporter's Policy

ECGC will pay claims to the extent of 95% where the loss is due to commercial risks

and 100% if the loss is caused by any of the political risks (Under the Standard

Policy, the extent of cover is 90% for both commercial and political risks).

Waiting period for claims: The normal waiting period of 4 months under the

Standard Policy has been halved in the case of claims arising under the Small

Exporter's Policy.

Change in terms of payment of extension in credit period: In order to enable small

exporters to deal with their buyers in a flexible manner, the following facilities are

allowed:

A small exporter may, without prior approval of ECGC convert a D/P bill into

DA bill, provided that he has already obtained suitable credit limit on the

buyer on D/A terms.

Where the value of this bill is not more than Rs.3 lacs, conversion of D/P bill

into D/A bill is permitted even if credit limit on the buyer has been obtained



on D/P terms only, but only one claim can be considered during the policy

period on account of losses arising from such conversions.

A small exporter may, without the prior approval of ECGC extend the due date of

payment of a D/A bill provided that a credit limit on the buyer on D/A terms is in

force at the time of such extension.

Resale of unaccepted goods: If, upon non-acceptance of goods by a buyer, the

exporter sells the goods to an alternate buyer without obtaining prior approval of

ECGC even when the loss exceeds 25% of the gross invoice value, ECGC may

consider payment of claims upto an amount considered reasonable, provided that

ECGC is satisfied that the exporter did his best under the circumstances to minimize

the loss. In all other respects, the Small Exporter's Policy has the same features as the

Standard Policy.

Benefits:-

This policy pays in the event of loss to the policyholder on account of:

Commercial Risks:

Insolvency of the buyer.

Failure of the buyer to make the payment due within a specified period,

normally 2 months from the due date.

Buyer's failure to accept the goods, subject to certain conditions.

Political Risks

Imposition of restriction by the Government of the buyer's country or any

Government action which may block or delay the transfer of payment made by

the buyer.

War, Civil War, revolution or civil disturbances in the buyer's country.

New Import restrictions or cancellation of a valid import license.

Any other cause of loss occurring outside India, not normally insured by


Premium

The premium rates depend on the country to which exports are made and the

period of repayment.

At least 20% of the total amount of premium should be paid in advance. The

balance amount of premium may be paid on a quarterly basis in proportion to

the amount of credit disbursed.

Requirements



Completely filled in Proposal Form along with minimum premium of Rs.2,000

is to be submitted to the ECGC.

Exporter should also confirm his acceptance of the premium rates, a schedule

of which will be given along with the Proposal Form.

Recommendations

Policy covers most of the risks faced by small exporters and provides the

confidence to exporters to expand the business aggressively.

Further it has been specifically designed keeping in view their requirements.

Hence it is recommended.

Exclusions

Commercial disputes including quality disputes raised by the buyer, unless the

exporter obtains a decree from a competent court of law in the buyer's country

in his favor.

Causes inherent in the nature of the goods.

Buyer's failure to obtain necessary import or exchange authorization from

authorities in his country.

Insolvency or default of any agent of the exporter or of the collecting bank.

Exchange rate fluctuation.

Failure or negligence on the part of the exporter to fulfill the terms of the

export contract.

Specific Shipment Policy - Short Term (SSP-ST)

Specific Shipment Policies - Short Term (SSP-ST) provide cover

to Indian exporters against commercial and political risks involved

in export of goods on short-term credit not exceeding 180 days.



Exporters can take cover under these policies for either a shipment or a few shipments

to a buyer under a contract. These policies can be availed of by

Exporters who do not hold SCR Policy and

By exporters having SCR Policy, in respect of shipments permitted to be

excluded from the preview of the SCR Policy.

Specific policy for the contracts may take any of the following forms:-

Specific Shipments (commercial and political risks) Policy - short-term.

Specific Shipments (political risks) Policy - short-term.

Specific Shipments (insolvency & default of L/C opening bank and political

risks) Policy - short-term.

Risks covered under SSP (ST)

Commercial risks: [For SSP-ST policies of the type Specific Shipments

commercial and political risks]

Insolvency of the buyer.

Failure of the buyer to make the payment due within a specified period,

normally four months from the due date.

Buyer's failure to accept the goods (subject to certain conditions).

Political risks: [For all the SSP-ST policies]

Imposition of restrictions by the Government of the buyer's country or any


the buyer;

War, civil war, revolution or civil disturbances in the buyer's country; New

import restrictions or cancellation of a valid import license;

Interruption of voyage outside India resulting in payment of additional freight

or insurance charges which cannot be recovered from the buyer.

Any other cause of loss occurring outside India not normally insured by


Insolvency & default of LC opening bank [For SSP-ST policies of the type

insolvency & default of L/C opening bank and political risks].

Insolvency of the L/C opening bank;

Failure of the LC opening bank to make the payment due within a specified

period, normally four months, from the due date.

Risks not covered under SSP (ST)





in his favour;

Causes inherent in the nature of goods;



Insolvency or default of any agent of the exporter or of the collecting bank;

Loss or damage to goods;

Exchange rate fluctuation;

Failure of the exporter to fulfill the terms of the export contract or negligence

on his part;

Non-payment under a letter of credit due to any discrepancy pointed out by the

L/C opening bank.

Procedure to obtain SSP (ST)

The exporter has to submit a proposal in the prescribed form along with a copy of the

L/C or relevant contract. Different proposal forms are to be used for different types of

SSP-ST policies. Normally, the proposal has to be submitted before making the

shipment and the cover would be given only from the date of receipt of proposal.

However, in case the exporter approaches ECGC for covering a shipment already

made, issue of policy can be considered provided not more than 15 days have elapsed

between the date of shipment and the date of receipt of proposal.

Shipments covered under SSP (ST)

The exporter can opt to cover one or more shipments under a particular contract. He

can also choose to cover shipments made during a given period within the validity of

the contract. For example if an exporter has received a contract for supply of goods

within a period of say, one year, he can choose to cover a batch of shipments to be

made within a period, say 90 days or 180 days. He may opt to cover further shipments

under another specific policy at a later date.

Period of validity

The policy would be valid for shipment(s) made from the date of receipt of proposal

up to the last date allowed under the relevant contract for shipment. If the exporter has

chosen to cover the shipments to be made during a particular period, the policy would

be issued for that period. In case the policy is issued to cover a shipment already made

before the proposal is submitted, the policy would be valid only for that shipment. If



the proposal is to cover the shipment already made under a contract and to cover

further shipments to be made under the same contract, the policy shall be issued for

the period from the date of the shipment already made up to the period of contract or

the period as desired by the exporter, whichever is earlier.

Percentage covered

The percentage of cover normally available under the policy would be 80% of the

gross invoice value of the shipments covered, in respect of countries in open cover.

However, policy could also be issued with a lower percentage of cover with

proportionate reduction in the amount of premium payable and the amount of

maximum liability. The percentage of cover in respect of countries under restricted

cover category would depend upon the underwriting policy applicable for the country

at the relevant point of time.


Maximum liability

The maximum liability (ML) which is the limit up to which ECGC would accept

liability under the policy is arrived at by applying the agreed percentage of cover to

the gross invoice value of the shipments covered under the policy. Enhancement in

ML, if necessitated by amendment to the original contract, can be considered subject

to payment of additional premium by an endorsement to the policy issued.

Processing fee and premium payable

Along with the proposal the exporter is required to pay a processing fee of Rs.1000/-

which is non-refundable. Premium will be charged on the gross invoice value in rupee

terms converted at the rate prevailing on the date of submission of the proposal.

Where the exporter has chosen to cover shipments to be made during a particular

period premium shall be charged for the shipments scheduled to be made during the

chosen period.

Premium rates

The rates of premium vary depending upon the terms of payment, the classification of

the buyer's country and whether a shipment is covered against comprehensive risks or

only political risk. To find out the premium, please contact your nearest ECGC

Branch.

Withdrawal



In case of any adverse experience / report on the buyer or his country ECGC or the

exporter can withdraw the cover. For the shipments made prior to such withdrawal,

cover would be available.

Seek extension of the validity period

If the exporter fails to make the shipment within the validity of the contract, he can

seek extension of the period of validity of the policy after getting the contract duly

extended.

Obligations on the part of the exporter holding SSP (ST)

Submission of statement of shipments made: On or before 15th of every month the

exporter is required to submit a statement of shipments made during the previous

month under the contract, which is covered under the policy. Submit along with the

proposal form.

Submission of statement overdue: of On or before 15th of every month the exporter

is required to submit a statement of payments against the shipments covered under the

contract which have remained overdue for more than thirty days from the due date;

Intimation of event affecting the risk: If the exporter comes to know about any

event likely to affect the risk the same has to be intimated to ECGC immediately and

in any case by not later than 30 days;

Action for minimizing loss: Immediate steps are to be taken in the event of non-

receipt of payment for any shipment. On learning of non-payment of the shipment, for

which the policy is obtained, exporter is required to take suitable action to prevent /

minimize the loss, including such action as may be suggested by ECGC. Action to

prevent / minimize loss will depend on the facts and circumstances of each case.

Given below is the course of action that may have to be taken immediately.

Persuading the buyer to make the payment while, at the same time,

maintaining recourse against him by getting the bill noted and protested for

non-payment;

Not agreeing to give any extension of the due date of the bill unless there are

good reasons for doing so. Prior approval of the Corporation should be taken

for granting such extension. In case any condition is stipulated by ECGC

while granting extension, it should be ensured that the conditions

If resale is not possible, to bring the goods back to India, with the prior

approval of ECGC (if the loss is up to 25% of the gross invoice value such

permission is not required).



Desisting from making any further shipment to the buyer until he has made the

payment for the bill in default.

Ascertained loss

Normally loss shall be ascertained four months after the due date. In case of

insolvency risk, loss shall be ascertained one month from the date of admission of

debt by the receiver or four months from the due date whichever is earlier. Where the

debt is yet to be admitted by the receiver an undertaking from the exporter has to be

obtained stating that he has done nothing or not omitted to do anything that will make

his claim in the insolvent estate in-admissible. Otherwise dispose of and in any case

not earlier than four months from the due date of the payment.

Filling a claim

An exporter can file his claim under the policy any time after the loss is ascertained

but within one year from the due date of payment for the shipment under claim.

Recovery on payment of claim

Upon payment of a claim the exporter shall continue to take steps for recovering the

dues from the buyer including action, if any, stipulated by ECGC. Any amount spent

on recovering the dues shall have a first charge on recovery. Any amount recovered

net of recovery expenses shall be shared between ECGC and the exporter in the same

ratio in which the loss is shared.

Closing a SSP (ST)

At the time of issue of SSP-ST Policy, a "Payment Advice Slip" ('PAS') is attached

requesting the exporter to advise ECGC about the payment when it is received from

the buyer or the L/C opening bank. If the exporter has sent the statement of shipments

made but fails to send the 'PAS' and if no statement of overdue is received from the

exporter within the prescribed period, action would be initiated to close the policy

presuming that the payment has been received from the buyer.

Export (Specific Buyers) Policy

Buyer wise Policies - Short Term (BP-ST) provide cover to

Indian exporters against commercial and political risks involved

in export of goods on short-term credit to a particular buyer. All

shipments to the buyer in respect of whom the policy is issued

will have to be covered (with a provision to permit exclusion of



shipments under LC). For every buyer, a separate policy has to be obtained. The

policy would be valid for a period of one year.

These policies can be availed of by

exporters who do not hold SCR Policy and

by exporters having SCR Policy,

In case all the shipments to the buyer in question have been permitted to be

excluded from the purview of the SCR Policy.

Types of BP (ST)

Buyer wise (commercial and political risks) Policy - short-term

Buyer wise (political risks) Policy - short-term.

Buyer wise (insolvency & default of L/C opening bank and political risks)

Policy – short-term.

Risks covered under BP (ST)

Commercial risks Insolvency of the buyer Failure of the buyer to make the

payment due within a specified period, normally four months from the due

date. Buyer’s failure to accept the goods (subject to certain conditions).

Political risks: (For all the BP-ST policies) Imposition of restrictions by the

Government of the buyer's country or any Government action which may

block or delay the transfer of payment made by the buyer; War, civil war,

revolution or civil disturbances in the buyer's country; New import restrictions

or cancellation of a valid import license; Insolvency & default of LC

opening bank [For BP-ST policies of the Buyer wise (insolvency & default

of L/C opening bank and political risks) Policy - short-term.] Insolvency of

the L/C opening bank; Failure of the LC opening bank to make the payment

due within a specified period, normally four months from the due date;

Risks not covered



in his favor;

Causes inherent in the nature of goods;



Loss or damage to goods;

Exchange rate fluctuation



Procedure

The exporter has to submit a proposal in the prescribed form. The proposal has to be

submitted before making the shipments and the cover would be given only from the

date of receipt of proposal. (In case the exporter desires to cover any shipment made

prior to the submission of proposal, the same can be covered under Specific Shipment

Policy, subject to its terms and conditions).

Percentage to be covered

The percentage of cover normally available under the policy would be 80% of the

gross value of the shipments covered. However, policy could also be issued with a

lower percentage of cover with proportionate reduction in the amount of premium

payable.


Maximum Liability

The Maximum Liability (ML) is the limit up to which ECGC would accept liability

under the policy.

Credit assessment

A CD fee of Rs. 1000/- shall be payable for proposals for buyer wise policy in respect

of each buyer/bank. A credit enhancement fee of Rs. 500/- is payable in case an

enhancement in the limit is desired due to increased volume of business. In case of

proposals for covering political risks only, no credit assessment fee will be charged.

Applicable premium rates

The rates of premium vary depending upon the terms of payment, the classification of

the buyer's country and whether a shipment is covered against comprehensive risks,

bank risks or only political risk. To find out the premium rate for a particular

transaction, go to the 'Premium Calculator' by clicking here. There is bonus claims are

available

Premium payable

Premium will be worked out on the projection given in the proposal in the proposal

form and taking into account the applicable premium rates. The premium for the first

quarter has to be paid within 15 days from the date the premium is called for.

Premium for the subsequent quarters has to be remitted based on the projected

turnover and also after adjusting any shortfall or excess in the premium paid for the

earlier quarter, within 15 days from the beginning of the respective quarter.

Renew the policy



Where the exporter does not seek renewal of cover in respect of any buyer on whom

he had taken cover earlier, the following course of action would be taken.

If the actual premium for the quarter is more than the premium collected on

the projected turnover for the quarter, the exporter would be advised to pay the

difference. In case the exporter fails to pay the premium within 15 days from

the date the premium is called for, cover for any loss in respect of the policy

would be limited to the turnover in respect of which premium has been paid.

If the actual premium is less than the premium collected on the projected

turnover the excess would be refunded.

Withdrawal

ECGC can withdraw the cover any time by informing the exporter in writing its

intention to do so. The cover shall stand terminated from the date of such withdrawal.

Shipments made to the buyer after that date will not stand covered under the buyer-

wise policy.

Obligations on the part of the exporter holding BP (ST)

Submission of statement of shipments made: Exporter has to submit, within

15 days after the end of the quarter, a statement of shipments made during the

quarter in respect of the buyer/bank covered under the Buyer wise policy. It is

also necessary to indicate in the statement the projected turnover for the next

quarter in respect of the buyer/bank covered under the policy.

Submission of statement of overdue: On or before 15th of every month is

required to a statement of payments against the shipments under the contract

which have remained overdue for more than thirty days from the due date;

Intimation of event affecting the risk: If the exporter comes to know any

event likely to affect the risk the same has to be intimated to ECGC and in any

case by not later than 30 days;

Action for minimizing loss: Immediate steps are to be taken in the event of

non-payment for any shipment. On learning of non-payment for the shipment,

for which the policy is obtained, exporter is required to take action to prevent /

minimize the loss, including such action as may be intimated by ECGC.

Given below is the course of action that may to be taken immediately:

Persuading the buyer to make the payment while, at the same time,

maintaining recourse against him by getting the bill noted and protested for

non-payment;



If resale is not possible, bringing the goods back to India , with the prior

approval of ECGC (if the loss is up to 25% of the gross invoice value such

permission is not required).

Desisting from making any further shipment to the buyer until he has made the

payment for the bill in default.

Ascertained loss

Normally loss shall be ascertained four months after the due date. In case of

insolvency risk, loss shall be ascertained one month from the date of admission debt

by the receiver or four months from the due date whichever is earlier. Where the debt

is yet to be admitted by the receiver an undertaking from the exporter has to be

obtained stating that he has done nothing or not omitted to anything that will make his

claim in the insolvent estate in-admissible.

Filling a claim

An exporter can file his claim under the policy any time after the loss is ascertained

but within one year from the due date of payment for the shipment claim.

Recovery on payment

Upon payment of a claim the exporter shall continue to take steps for recovering dues

from the buyer including action, if any, stipulated by the Corporation. Any amount

spent on recovering the dues shall have a first charge on recovery. The amount

recovered net of recovery expenses shall be shared between ECGC and the exporter in

the same ratio in which the loss is shared.

Buyer Exposure Policies



Presently, in the policies offered to exporters premium is charged on the export

turnover, though the Corporation’s exposure on each buyer is

controlled through a system of approval of credit limits on the

buyer for covering commercial risks. While this suits the small

and medium exporters, many large exporters having large

number of shipments have been complaining about the volume of

returns to be filed under the policy necessitating the deployment

of their resources for this purpose and also resulting in possible unintentional

omissions or commissions in such reporting, which have an impact on the settlement

of claims. There has been a demand for simplification of the procedures as well as for

rationalization of the premium structure. Considering the requirements of such

exporters, the Corporation has decided to introduce policies on which premium would

be charged on the basis of the expected level of exposure. Two types of exposure

policies – one for covering the risks on a specified buyer and another for covering the

risks on all buyers- are offered.

Two types of Exposure policies are offered, viz,

Exposure (Single Buyer) Policy – for covering the risks on a specified buyer&

Exposure (Multi Buyer) Policy – for covering the risks on all buyers.

Exposure (Single Buyer) Policy covers

An exporter can choose to obtain exposure based cover on a selected buyer. The cover

would be against commercial and political risks attached to the buyer for both non-LC

and LC transactions. A separate Buyer Exposure Policy will be issued for each buyer

covering all the exports to be made to the buyer during a period of twelve months. If

the exporter has opted for commercial and political risks cover, failure of the LC

opening bank in respect of exports against LC will also be covered, for the banks with

World Rank (WR) up to 25,000 as per latest Banker’s almanac. For covering any

bank with ranking beyond that level, the exporter has to obtain specific approval from

the branch, which issued the policy prior to making the shipment. For covering the

political risks only, in respect of LC transactions or shipments to associates, Buyer

Exposure policy with endorsement restricting the cover to political risks only with

significantly less premium is offered.

Percentage of loss

The loss of coverage would be 90 percent for those who also hold our Standard

Policies and at 80 percent for others. If it is mutually agreed between the Corporation



and the policyholder, the Policy could provide for a higher share of loss to be retained

by the insured with proportionate reduction of premium.


The existing premium structure for SCR Policies is related to the shipments made and

not to the loss limits (credit limit / maximum liability) specified for a buyer. The

premium structure for an exposure-based policy is therefore quite different from that

for the SCR Policies.

Procedure for payment of premium

Exporters opting for this Policy would be offered the option to remit the premium

either on a quarterly installment basis or on an annual basis. Where the exporter opts

to pay premium on an annual basis, a discount of 5% would be given in the premium

payable. Premium for every quarter shall be payable in advance prior to the beginning

of the quarter. In case of any delay, the cover shall not be available in respect of

shipments made during the period from the beginning of the quarter up to the date of

remittance.

Premium once paid is treated as non-refundable. In case the Corporation withdraws

cover during the period of the policy due to any reason, the proportionate premium for

the balance period in months beyond the month in which the cover is withdrawn will

be refunded subject to retention of minimum premium equivalent to 25% of the total

premium.

Other procedural

The policy would specify the loss limit up to which claim will be entertained

due to any of the risks covered under the policy in respect of shipments made

to the buyer during the policy period.

The actual turnover in the prescribed format would be required at the time of

renewal of the policy.

The exporter is required to obtain the prior approval of the Corporation for

extending the due date for any shipment, if the revised due date is beyond 180

days from the date of shipment.

The non-receipt of payments is to be notified within 30 days from the due date

or extended due date of payment.

The claim is required to be filed in the prescribed form with in one year from

the due date of payment.



The exporter is required to submit the proposal form prescribed with the non-

refundable policy fee of Rs.1,000/-.

Need for Exposure (Multi – Buyer) Policy

Some exporters export to large number of buyers. The number of shipments made by

them is also quite high. They may not find it convenient to apply for buyer exposure

policy for all their buyers. It may also be difficult for them to declare their exports

shipment-wise under the Standard policies. In order to meet the needs of such

exporters, “Multi-buyers Exposure Policy” has been introduced.

Features of Exposure (Multi – Buyer) Policy

Exporters can take cover for an Aggregate Loss Limit (ALL) on all their buyers to

whom they propose to sell on credit terms in open cover countries. While accepting

the proposal, the Corporation would expect the ALL sought to be not less than 10% of

the past 12 month turnover applicable for the categories/countries for which cover is

sought.

The policy would be issued for a period of one year.

If the transaction is on LC terms, failure of the LC opening bank in respect of

exports against LC will also be covered, for banks with World Rank up to

25000 as per latest Banker’s Almanac.

Cover in respect of exports to restricted cover countries would not be available

under this policy.

Loss limit in respect of export to any individual buyer/bank will, however, be

restricted to 10% of the ALL.

Premium at the rate of 275 paise per Rs.100/- is payable on the ALL fixed to

cover all shipments to be made during the Policy year.

The risks covered, percentage of loss, payment of premium, declaration of

turnover, enhancement of ALL, overdue declaration, extension in due date,

claim etc will remain the same as Exposure (Single Buyer) Policy.

The exporter has to apply in the prescribed proposal form along with the non-

refundable policy fee of Rs.5, 000/-.

Service Policy



Where Indian companies conclude contracts with foreign principals for providing

them with technical or professional services, payments due under the contracts are

open to risks similar to those under supply contracts. In order to give a measure of

protection to such exporters of services, ECGC has introduced the Services

Types of Services Policy and Protection

Specific Services Contract (Comprehensive Risks) Policy;

Specific Services Contract (Political Risks) Policy;

Whole-turnover Services (Comprehensive Risks) Policy; and

Whole-turnover Services (Political Risks) Policy

Specific Services Policy, as its name indicates, is issued to cover a single specified

contract. It is issued to provide cover for contracts, which are large in value and

extend over a relatively long period. Whole-turnover services policies are appropriate

for exporters who provide services to a set of principals on a repetitive basis and

where the period of each contract is relatively short. Such policies are issued to cover

all services contracts that may be concluded by the exporter over a period of 24

months ahead.

The Corporation would expect that the terms of payment for the services are in line

with customary practices in international trade in these lines. Contracts should

normally provide for an adequate advance payment and the balance should be payable

periodically based on the progress of work. The payments should be backed by

satisfactory security in the form of Letters of Credit or bank guarantees.

Services policies are designed to cover contracts under which only services are to be

rendered. Contracts under which the value of services to be rendered forms only a

small part of a contract involving supply of machinery or equipment will be covered

under an appropriate specific policy for supply contracts.

Software Project Policy

The Services Policies of the Corporation which have been in

existence for some time were offered to provide protection of



exporters of services including software and related services. However it was found

that the general services policy does not meet with the exact requirements of software

exporters. It was therefore decided to introduce a new credit insurance cover to meet

the needs of the software exporters, namely, software projects policy, where the

payments will be received in foreign exchange. The general services policies will

continue to be offered for the export of services other than software and related

services.

Cover under the Software Project Policy

The following software services will be eligible for cover under the Software Projects

Policy: Software project services, either on one time/turnkey basis or

progressive/milestone basis, involving

Development of software off-shore (i.e. at the exporters location in India) to

be delivered and implemented in the buyer’s (client) location; or

Development of software on-site of the client and supply and implementation;

or

Both off-shore and on-site development.

Features of Software Projects Policy

Instead of monthly declaration, exporter would be required to submit a

progress report indicating the level of completion, payment sought and

payment received and deviations in these areas.

The exporter has to specify in advance the manner in which the work in

progress would be estimated (namely, the reports that would be available on

the volume of work done and the rate to be applied on the defined unit to

arrive at the work done - it could be a document giving the man hours spent

and rate per man hour or it could be a simple number of days worked and rate

per day).

Liability of the Corporation would be only for the work reported in the

progress report.

The Corporation will have the right to examine the books of accounts and

other documents of the exporter either on its own or through an authorized

agency prior to admission of claim. Certification by banks may be dispensed

with in cases where it is felt that it is not possible.

The contract should provide for a clear acceptance mechanism in respect of

services rendered and, if possible, a procedure for arbitration. It should also



provide for rectification of mistakes – errors and also omissions. The

Corporation would not cover any loss due to errors or omissions.

Loss coverage will be restricted to 80% as there is no salvage possibility.

Apart from stipulating the loss limit on the buyer, the policy document would

also specify the limit up to which the losses are covered under other risks.

Risks covered under the Software Projects Policy

The risks covered under the Policy would be similar to the risks covered under

standard policies in character but the wordings are slightly amended to be in line with

the special features of the software exports. The risks covered would be as under:

Commercial risks:

Default – the failure of the customer to pay to the exporter within four months

after the due date of payment the contract price of services rendered to and

accepted by the customer: or

Insolvency of the customer: or

Wrongful repudiation of the contract by the customer after the exporter has

incurred expenses for commencement of services.

Political risks:

The operation of a law or of an order, decree or regulation having the force of

law, which, in circumstances outside the control of the Exporter and/or of the

buyer prevents, restricts or controls the transfer of payment from the

customer’s country to India: or

The occurrence of war between the customers’ country and India: or

The occurrence of war, hostilities, civil war, rebellion, revolution, insurrection

or other disturbances in the customer’s country; or

The imposition in India or in the customer’s country after the date of contract,

of any law or of an order, decree or regulation having the force of law, which

in circumstances outside the control of the Exporter and/ or the customer,

prevents performance of the contract; or

Any of the following causes of loss not being within the control of the

exporter and/ or the customer which arises from an event occurring outside

India;

Refusal of visa for employees of exporter who are required to be in the place

of the project to enable the exporter to execute contractual obligations for

reasons not attributable to the exporter or customer.



Unjustified restraining of personnel of the exporter by authorities in

customer’s country.

Increase in any tax or introduction of a new tax payable by the exporter in the

customer’s country, which is not recoverable from the customer.

Imposition by a competent court of law or the government, a rule or law or an

order which results in losses / additional costs due to infringement of

Intellectual Property Rights (IPR) of a process or software which was either in

the domain of free software or the IPR was not established on the date of

contract.

Variation in exchange rates between Indian rupee and foreign currency

concerned beyond three percentages over the stipulated level resulting in loss

to the exporter for contracts involving service beyond 360 days.

The losses due to the risks described under (e) above would be covered by the

Corporation subject to a maximum of 25% of the value of export.

Policy supply of software products and packages will be covered under

Pure supply of software products and packages could be covered under the standard

and specific policies offered for commodities.

IT-enabled Policy Services (Specific Customer)

IT-enabled Services (Specific Customer) Policy is issued to

cover the following commercial and political risks involved in

rendering IT-enabled services to a particular customer:

Commercial risks:

Insolvency of the customer.



Failure of the customer to make the payment due within a specified period,

normally four months from the due date.

Buyer's failure to accept the services rendered (subject to certain conditions).

Bank risks:

Bankruptcy of L/c opening bank.

Failure of L/c opening bank to make the payment due within a specified

period, normally within four months from the due date (Non-payment due to

discrepancies in the document will not be covered).

Political risks:

Imposition of restrictions by the Government of the customer’s country or any


the customer;

War, civil war, revolution or civil disturbances in the customer’s country;

New import restrictions or cancellation of a valid import license by authorities

in the customer’s country;

Cancellation by the Govt. of India a legally valid and binding contract

between the exporter and the customer.

Types of ITES contracts covered

ITES policy will provide cover in respect of contracts for rendering service during a

defined period with billing on the basis of service rendered during a period say, a

week, a month or a quarter, where the payments due for the services rendered will be

received in foreign exchange.

Features of IT- enabled services contract that will be eligible for cover under IT-

enabled services policy

Some of the important features of the IT enabled services contracts are as follows:-

The contract would be for providing certain service during a defined period. It

is not for completion of a particular work or job.

Billing would be for the service rendered during a pre-determined interval – a

week, a fortnight or a month. The contract should stipulate the manner for

assessment of service rendered, periodicity of billing, manner of acceptance

and due date for the payment of bills.

Where there is a non-payment problem, there can be certain services invoiced

and accepted but not paid, certain services invoiced but not accepted yet and

certain services rendered but yet to be invoiced.



There can be cases where there is no physical documentation. The entire

process may be carried out through electronic media including billing.

Consequently, there may not be any bank, which handles the documents.

The contract could also provide for detection of mistakes or errors while

rendering the service and the procedure for correction. Penalties or reduction

in payment for errors and omissions are also possible.

Features of the IT-enabled services policy

Some of the important features of these policies would be as follows:

Monthly declaration indicating the services rendered, invoices raised and

invoices paid will have to be submitted by the exporters in the prescribed

form. No separate overdue report will be necessary. In case of non-payment,

Liability of the Corporation would be for the services rendered and reported in

the monthly declaration.

The Corporation will have the right to examine the books of accounts and

other documents of the exporter either on its own or through an authorized

agency prior to admission of claim. Certification by banks may be dispensed

with in cases where it is felt that it is not possible.

The contract should provide for a clear acceptance mechanism in respect of

services rendered and, if possible, a procedure for arbitration. It should also

provide for rectification of mistakes – errors and also omissions. The

Corporation would not cover any loss due to errors or omissions.

Cover will be given only up to 80%.

The policy will be offered for contracts, which contain standard terms and conditions

as per the norms and practices of the IT-enabled Services export industry.


Exporters opting for this Policy would be offered the option to remit the premium

either on a quarterly installment basis or on an annual basis. Where the exporter opts

to pay premium on an annual basis, a discount of 5% would be given in the premium

payable. Premium for every quarter shall be payable in advance prior to the beginning

of the quarter. In case of any delay, the cover shall not be available in respect of

shipments made during the period from the beginning of the quarter up to the date of

remittance. Premium once paid is treated as non-refundable. In case the Corporation

withdraws cover during the period of the policy due to any reason, the proportionate

premium for the balance period in months beyond the month in which the cover is



withdrawn will be refunded subject to retention of minimum premium equivalent to

25% of the total premium.

Other procedural

The policy would specify the loss limit up to which claim will be entertained

due to any of the risks covered under the policy in respect of services rendered

to the customer during the policy period.

If the exporter desires enhancement of the customer loss limit and if the

Corporation is satisfied with the reasons, the same may be agreed to with

proportionate increase in the premium payable for the rest of the policy period

from the month following the request for change subject to a minimum of

three months.

Similarly, the Corporation will have the discretion to reduce the loss limit on

an insured customer with corresponding reduction in the premium amount

payable for the rest of the policy period from the following month.

The actual turnover in the prescribed format would be required at the time of

renewal of the policy.

The exporter is required to obtain the prior approval of the Corporation for

extending the due date for any service rendered, if the revised due date is

beyond 180 days from the date of rendering of such service.

The claim is required to be filed in the prescribed form with in one year from

the due date of payment.

The exporter is required to submit the proposal form prescribed with the non-

refundable policy fee of Rs.1, 000/-.

Construction Works Policy

Construction Works Policy is designed to provide cover to an Indian contractor who

executes a civil construction job abroad.

The distinguishing features of a construction contract are that

(a) The contractor keeps raising bills periodically throughout the

contract period for the value of work done between one billing

period and another;



(b) To be eligible for payment, the bills have to be certified by a consultant or

supervisor engaged by the employer for the purpose and

(c) that, unlike bills of exchange raised by suppliers of goods, The bills raised by the

contractor do not represent conclusive evidence of debt but are subject to payment in

terms of the contract which may provide, among other things, for penalties or

adjustments on various counts.

The scope for disputes is very large. Besides, the contract value itself may only be an

estimate of the work to be done, since the contract may provide for cost escalation,

variation contracts, additional contracts, etc. It is, therefore, important that the

contractor ensures that the contract is well drafted to provide clarity of the obligations

of the two parties and for resolution of disputes that may arise in the course of

execution of the contract. Contractors are well advised to use the Standard Conditions

of Contract (International) prepared by the Federation International Des Ingenieurs

Conseils (FIDIC) jointly with the Federation International du Batiment et des Travaux

Publics (FIBTP).

Risks covered by Construction Works Policy

The Construction Works Policy of ECGC is designed to protect the Contractor from

85% of the losses that may be sustained by him due to the following risks:

Insolvency of the employer (when he is a non-Government entity);

Failure of the employer to pay the amounts that become payable to the

contractor in terms of the contract, including any amount payable under an

arbitration award;

Restrictions on transfer of payments from the employer's country to India after

the employer has made the payments in local currency;

Failure of the contractor to receive any sum due and payable under the

contract by reason of war, civil war, rebellion, etc;

The failure of the contractor to receive any sum that is payable to him on

termination or frustration of the contract if such failure is due to its having

become impossible to ascertain the amount or its due date because of war,

civil war, rebellion etc;

Imposition of restrictions on import of goods or materials (not being the

contractor's plant or equipment) or cancellation of authority to import such

goods or cancellation of export license in India, for reasons beyond his

control; and



Interruption or diversion of voyage outside India, resulting in his incurring in

respect of goods or materials exported from India, of additional handling,

transport or insurance charges, which cannot be recovered from the employer.

Risks not covered by Construction Works Policy

The Construction Works Policy excludes from its purview losses, which may be

sustained due to the following causes:

Failure of the contractor and/or the employer (where the employer is not a

government) to obtain, issue or deliver any authority necessary under the law

of India or the employer's country for execution of the project and to make

payment thereof;

Risks which can normally be insured with commercial insurers;

Insolvency, default or negligence of any agent, seller or sub-contractor;

Execution of any works or incurring of any expenses by the contractor after

the estimated date for completion of the contract unless, at the request of the

contractor, ECGC has agreed to a change in such date.

Execution of any works or incurring of any expenses by the Contractor after

the employer has been in default in making any payment for a period of 120

days unless, on an application made by the contractor within 90 days of such

default, ECGC has agreed to his continuing execution of the contract despite

the employer's default

Premium

The premium rate for a Construction Works Policy is dependent on the classification

of the employer's country and the payment terms and will be quoted by ECGC on

request. The rate will be applied on the estimated contract value to arrive at the

amount of premium payable to ECGC. The premium is payable in advance. The

contractor is obliged to notify ECGC if the estimated contract value undergoes any

change and the premium will be adjusted accordingly.

Submit periodical declarations

The contractor is required to submit to the Corporation such periodical declarations as

may be prescribed by it relating to the execution of the contract and the position of

payments.

Ascertained loss

When a loss arises due to any of the risks insured, the amount of loss shall be

ascertained by ECGC, after the contractor files a claim under the Policy, in



accordance with the provisions of the Policy. However, where the contractor has been

simultaneously executing certain other contracts also for the same employer, all

amounts paid by the contractor shall be allocated to the amounts outstanding under all

the contracts in the chronological order of the due dates of payment of those amounts,

irrespective of whether such other contracts have been insured by ECGC or not.

Conditions in which claims are paid

If a claim is admitted under the Policy, the Corporation shall make payment of the

amount direct to the contractor's bank in India that may have a right or lien over the

receivables under the contract. The payment shall be subject to the contractor giving

ECGC an undertaking to the effect that he will take all steps, including such steps as

may be suggested by ECGC to recover the dues from the employer and to pass on to

ECGC its share of the amounts so recovered. The contractor shall, if required to do so,

support such an undertaking with a bank guarantee for an amount equal to the amount

of claim.

Claim and Recovery

The liability of the Corporation under the Policy will be in terms of Indian Rupee. If

the contract value is expressed in a foreign currency, it shall be converted into Indian

Rupees at the rate specified in the Policy, the rate being approximately the same as the

bank buying rate of exchange on the date of contract, for the purpose of determining

the amount covered and the Maximum Liability of ECGC under the Policy.

The same exchange rate shall be used by the contractor for the purpose of submitting

periodical declarations to ECGC. However, if the currency in which the employer has

to pay has been devalued before a claim is paid by ECGC, the amount claimed by the

contractor in Indian Rupees shall be based on the devalued rate. Recoveries will be

reckoned, net of recovery expenses at the actual rate at which the amounts recovered

were converted by the receiving bank into Rupees.

Requirements

The scope for disputes is very large. Besides, the contract value itself may only be

an estimate of the work to be done, since the contract may provide for cost

escalation, variation contracts, additional contracts, etc. So contractor should ensure

that the contract is well drafted to provide clarity of the obligations of the two

parties and for resolution of disputes that may arise in the course of execution of

the contract. Contractors may use the Standard Conditions of Contract

(International) prepared by the Federation International Des Ingenieurs Conseils



(FIDIC) jointly with the Federation International du Batiment et des Travaux

Publics (FIBTP).The contractor is required to submit to the ECGC such periodical

declarations (exchange rate shall be as specified in the policy) as may be prescribed

by it relating to the execution of the contract and the position of payments.

Recommendations

It is a comprehensive policy covering credit risk faced by Indian contractors

executing civil contracts abroad and hence recommended.

Specific Policy for Supply Contract

The Standard Policy is a whole turnover policy designed to provide a continuing

insurance for the regular flow of an exporter's shipments for which

credit period does not exceed 180 days. Contracts for export of

capital goods or turnkey projects or construction works or

rendering services abroad are not of a repetitive nature on a case-to

and they involve medium/long-term credits. Such transactions are,

therefore, insured by ECGC -case basis under specific policies.

Formalities are applied for contracts

All contracts for export on deferred payment terms and contracts for turnkey projects

and construction works abroad require prior clearance of Authorized Dealers, EXIM

Bank or the Working Group in terms of powers delegated to them as per exchange

control regulations (Kindly refer to 'Projects Exports Manual' of Reserve Bank of

India. Applications for the purpose are to be submitted to the Authorized Dealer (the

financing bank), which will forward applications beyond its delegated powers to the

EXIM Bank. Proposals for Specific Policy are to be made to ECGC after the contract

has been cleared by the Authorized Dealer, EXIM Bank or the Working Group, as the

case may be.

Risks are covered



Specific Shipment (Comprehensive Risks) Policy;

Specific Shipments (Political Risks) Policy;

Specific Contract (Comprehensive Risks) Policy; and

Specific Contract (Political Risks) Policy

Specific Shipments (Comprehensive Risks) Policy provides cover against all the risks

covered under the Standard Policy for shipments to be made under the contract in

question (For details of risks, click here). It is, therefore, the appropriate policy for an

exporter to take if the payments are open to both commercial and political risks.

Where the Commercial risks are absent, e.g. where the payments are guaranteed by a

bank or by the Government of the overseas country, the exporter may opt for the

Specific Shipments (Political Risks) Policy for which the premium rate will be lower

than that for the Comprehensive Risks Policy.

Specific Contract Policy (which also can be for comprehensive or political risks)

differs from Shipments Policy in that the former provides the exporter not only with

the post-shipment cover like the latter but also with some pre-shipment cover from the

date of contract. In case shipments could not be made due to any of the risks covered

or due to restriction on export of the goods from India, the loss in respect of

unshipped goods will also be covered under Contract Policies. Premium rates for

Contract Policies will be higher than that for Shipment Policies.

General conditions regarding terms of payment

To be eligible for cover under specific policies, the terms of payment for the export

contracts should be in line with customary practices in the international markets. At

least, 15% of the contract value should be payable before shipment including an

advance payment of at least 5%. The balance amount should be repayable in equal

semi-annual installments commencing six months after the date of shipment. Where

the contract provides for supply and erection of a complete plant, the first installment

may fall due after six months from the date of commissioning of the plant. The credit

period should not normally exceed 5 years. Longer credit period may be approved

only in the case of exceptionally large projects if the circumstances of the case justify

it. Adequate security should be obtained in the form of government guarantee or bank

guarantee.


The premium rates will depend on the country to which exports are to be made and

the repayment period.



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. If the terms and conditions of the contract undergo any change

subsequently, ECGC should be informed of the same, so that changes, if any, in the

applicable premium rates can be ascertained.

Premium payable

The entire premium is normally payable in advance. Installment facility may be

granted for payment of a part of the premium if the contract value is very large and if

the shipments are spread over a relatively long period, but the entire premium will

have to be paid by the time the last shipment is made. Interest will be charged for the

installment facility.

Export Turnover Policy

Turnover policy is a variation of the standard policy for the benefit

of large exporters who contribute not less than Rs. 10 lacs per

annum towards premium. Therefore all the exporters who will pay

a premium of Rs. 10 lacs in a year are entitled to avail of it.

Difference in turnover policy and standard policy

The turnover policy envisages projection of the export turnover of the exporter for a

year and the initial determination of the premium payable on that basis, subject to

adjustment at the end of the year based on actual. The policy provides additional

discount in premium with an added incentive for increasing the exports beyond the

projected turnover and also offers simplified procedure for premium remittance and

filing of shipment information. It also provides for higher discretionary credit limits

on overseas buyers, based on the total premium paid by the exporter under the policy.

The turnover policy is issued with a validity period of one year. In most of the other

respects the provisions relating to standard policy will apply to turnover policy.

Procedure for submission of shipping declarations

The holders of turnover policy need not submit monthly declarations of shipment.

Instead, they have only to submit a statement of shipments made during the quarter in

a prescribed format within 30 days of the end of the quarter.

Premium rates and discount rates



The basic premium rates applicable for the standard policy will apply to the turnover

policy also. However, an exporter holding a standard policy opts for turnover policy,

he will be entitled to an additional discount of 10% over and above the 'no claim

bonus' which he is enjoying under the standard policy, subject to a minimum total

discount of 20%. If an exporter not holding the standard policy avails of the turnover

policy, he will be entitled to a discount of 20%. In case of no claims in future, the

exporter will be entitled to further 'no claim bonus' and consequently total discount.

Thus the total discount could go up to 60%.


The premium calculated on the projected turnover is payable in four quarterly

installments (grant of facility of payment of premium in monthly instilments will be

considered on a case to case basis).

Consignment Exports Policy

(Stockholding Agent and Global Entity)

Economic liberalization and gradual removal of international barriers for trade and

commerce are opening up various new avenues of export

opportunities to Indian exporters of quality goods. One of the

methods being increasingly adopted by Indian exporters is

consignment exports where the goods are shipped and held in stock

overseas ready for sale to overseas ready for sale to overseas buyers,

as and when orders are received. To protect the Indian Exporters

from possible losses when selling goods to ultimate buyers, it was decided to

introduce Consignment Policy Cover.

There are two policies available for covering consignment export viz;

Consignment Exports (Stock-holding Agent)

Consignment Exports (Global Entity Policy)

Covered can available under which circumstances

A consignment Exports (Stock-holding Agent) Policy will be appropriate for each

exporter – stock holding agent combination provided the following criteria are

satisfied.

• Merchandise is shipped to an overseas entity in pursuance of an agency agreement;



• The overseas agent would be an independent and separate legal entity with no

associate/sister concern relationship with the exporter;

• The agent’s responsibilities could be any or all of the following, viz., receiving the

shipment, holding the goods in stock, identifying ultimate buyers and selling the

goods to them in accordance with the directions, if any, of his principal (exporter);

and

• The sales being made by the agent would be at the risk and on behalf of the exporter

(whether or not such sales are in the agent’s own name or otherwise) in consideration

of a commission or some similar reward or compensation on sales completed.

Insurance Cover for Buyer's Credit and Line of Credit

Buyer's Credit is a credit extended by a bank in India to an overseas

buyer enabling the buyer to pay for machinery and equipment that he

may be importing from India for a specific project. A Line of Credit

is a credit extended by a bank in India to an overseas bank,

institution or government for the purpose of facilitating import of a

variety of listed goods from India into the overseas country. A

number of importers in the overseas country may be importing the

goods under one Line of Credit.

ECGC has evolved schemes to protect the lending banks from certain risks of non-

payment. These covers take the form of an agreement between the lending bank and

ECGC and are issued on a case to case basis. Credit terms and the length of the credit

period should be in conformity with what is appropriate for the export of the relevant

items. There should be adequate security for the repayments to be made by the

borrower.

Cover can be granted either for political risks or for comprehensive risks. Political

risks covered under the scheme are:

The occurrence of war between the country of the overseas party and India.

The occurrence of war, hostilities, civil war, revolution, rebellion, insurrection

or other disturbances in the country of overseas party.

If ECGC agrees to provide comprehensive risks cover, the risk of protracted default of

the borrower to pay the amounts due under the loan agreement and insolvency of the



borrower, where applicable, will be covered in addition to the political risks

mentioned above. The premium rates applicable to comprehensive risk cover will

naturally be higher than that for political risks cover. Normally ECGC covers up to

85% of the loss.

The premium rates depend on the country to which exports are made and the period of

repayment.

Benefits

This policy pays in the event of loss to the bank on account of:

Commercial Risk

1. The risk of protracted default of the borrower to pay the amounts due

under the loan agreement

2. Insolvency of the borrower

Political Risks

1. The occurrence of war between the country of the overseas party and India.

2. The occurrence of war, hostilities, civil war, revolution, rebellion, insurrection

or other disturbances in the country of overseas party.

3. The operation of law or of an order, decree or regulation having the force of

law which in circumstances outside the control of the lender and/or the

overseas party, prevents, restricts or controls, the transfer of the sums due to

the lender by the overseas party under the Financial Agreement.

Premium

1. The premium rate depends on the country to which exports are made and the

period of repayment.

2. At least 20% of the total amount of premium should be paid in advance. The

balance amount of premium may be paid on a quarterly basis in proportion to

the amount of credit disbursed.

Requirements

These covers take the form of agreement between ECGC and bank.

Credit terms and the length of the credit period should be in conformity

with what is appropriate for the export of the relevant items.

There should be adequate security for the repayments to be made by

the borrower.



Recommendations

This policy helps the banks in reducing the risk profile of their portfolio. Hence it is

recommended.

Maturity Factoring

Factoring is the purchase of accounts receivables. The supplier

(exporter) assigns his accounts receivables in favour of the Factor

and gives notice of assignment to the debtor. Factoring provides

Financing, by way of pre-payment of the receivables;

Sales ledger maintenance;



Collection of receivables/recovery of bad debts and

Credit protection against bad debts.

When pre-financing is provided but no credit protection is guaranteed by the Factor,

(i.e. the client will be required to refund the amount pre-financed, together with

interest thereon in the event of failure/insolvency of the debtor), it is called recourse

factoring.

When no pre-financing of the receivables is done, but the Factor undertakes to pay the

amount due only on maturity of the credit period, it is called maturity factoring.

ECGC has introduced non-recourse maturity export factoring.

Provided services

These are

100% credit guarantee protection against bad debts;

Sales register maintenance in respect of factored transactions;

Regular monitoring of outstanding credits, facilitating collection of

receivables on due date, recovery, at its own cost, of all recoverable bad debts.

Payments would be received by the exporter, in his account, through normal banking

channels. In the event of non-realisation of dues on factored export receivables

ECGC will promptly make the payment in Indian Rupees, of an equivalent amount,

immediately upon the crystallization of dues by the bank (exchange rate as on the date

of crystallization will apply).

Exporters get finance

ECGC would facilitate easier availability of bank finance to its factoring clients, by

rendering such advances to be an attractive proposition to banks. The Factoring

Agreement that would be concluded by ECGC with its clients has an in-built

provision incorporating an on-demand guarantee in favour of the bank without any

additional payment or compliance or other requirements to be satisfied by the bank.

Benefits to the exporters

Option to give easier credit terms to overseas customers - Better protection

than an irrevocable letter of credit, without the need to insist on establishing

one.

Enables to offer more friendly delivery terms, like direct delivery to the

customer (as against DP/DA) without any risk.

Reduced foreign bank handling charges on documents



Substantial cost savings relating to monitoring and follow up (telephones,

faxes, follow-up visits) of receivables, overdue bank interest on delayed

collections and recovery expenses relating to bad debts.

Increase in export sales, due to more competitive terms offered to customers.

Better security than even Letters of Credit (as there is a possibility of refusal

of payment in the latter on account of even minor discrepancies).

Elimination of uncertainties relating to realisation of accounts receivables

resulting in better cash management to meet working capital requirements.

Full attention to procurement/production, marketing and sales and growth of

business, due to freedom from chasing receivables.

Availability

Seek setting up of the facility by forwarding a formal application to the

nearest office of ECGC, through the exporter's bank.

Furnish full information with regard to business, including information on

overseas customers, the bills in respect of whom are to be factored.

Get pre-approval by ECGC for the purpose and have a 'Permitted Limit'

(PL) established on each one of the overseas customers.

Enter into a Factoring Agreement with ECGC and offer to ECGC for

factoring (with payment of factoring charges) all future export transactions

on DA/OD terms with those buyers on whom a PL has been established.

Approach the exporter's bank for arranging advances on such factored

receivables, and notify the name of the bank to ECGC to enable ECGC to

communicate to the bank, the limit established on each customer.

Ensure due performance of obligations to the buyer under export

contract/purchase order.

Specific benefits to the banks

For the banks, it would be a win-win situation all the way. Advances given against

ECGC-factored export receivables could an irrevocable letter of credit. Become

the most preferred export advance portfolio for a bank, even better than the

advances granted under

100% credit protection, free of cost.

Prompt and immediate payment by ECGC of the full amount outstanding on

the receivable to the bank, within 3 days of crystallization of the dues, in the



event of non-realisation of factored receivables on due date, without any

protracted processing or scrutiny and without raising any queries.

Savings on post-shipment guarantee premium to be paid to ECGC, if any.

No pre-disbursal risk assessment or post-disbursal monitoring required. Full

risk is on ECGC, with regard to repayment of the amount due (in rupees).

Opportunity to build 'zero-risk assets', since the bank would not run any risk

on the borrower, on the buyer or on his country.

Banks could earn interest on a priority sector lending, without any of the

attendant risks or hassles.

Opportunity to satisfy additional working capital needs of the customer by

sanctioning additional limits without enlarging the exposure risks.

Protection for the banks

The bank would be furnished with a certified copy of the Factoring Agreement

concluded between the client and ECGC.

Role

Encourage exporter-customers to explore the possibility of availing of the

factoring facility from ECGC.

Consider sanctioning of additional limits to exporters.

Help ECGC to collect factoring charges on each of the factored invoices.

Fees and charges

The factoring application fee payable initially is Rs.10,000/-. For setting up permitted

limits on each of his overseas customers, the exporter will have to pay a processing

fee equal to 0.05% of the permitted limit sought subject to a minimum of Rs.2000.

After this the factoring charges payable as and when an export bill is to be factored

depends on the country to which the export is made and the credit period.

Special Schemes

Transfer Guarantee

When a bank in India adds its confirmation to a foreign Letter of Credit, it binds itself

to honour 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

confirming bank will suffer a loss if the foreign bank fails to



reimburse it with the amount paid to the exporter. This may happen due to the

insolvency or default of the opening bank or due to certain political risks such as war,

transfer delays or moratorium, which may delay or prevent the transfer of funds to the

bank in India. The Transfer Guarantee seeks to safeguard banks in India against losses

arising out of such risks.

Transfer Guarantee is issued, at the option of the bank to cover either political risks

alone, or both political and commercial risks. Loss due to political risks is covered

upto 90% and loss due to commercial risks upto 75%.


The premium rates depend on the country of export and the tenor of L/C.

Overseas Investment Guarantee

ECGC has evolved a scheme to provide protection for Indian Investments abroad.

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 insurance. The investment

may be either in cash or in the form of export of Indian capital

goods and services. The cover would be available for the original

investment together with annual dividends or interest receivable.

The risks of war, expropriation and restriction on remittances are

covered under the scheme. As the investor would be having a hand in the

management of the joint venture, no cover for commercial risks would be provided

under the scheme.

Features of the Overseas Investment Insurance

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.

ECGC may consider providing cover in the absence of any such agreement provided

it is satisfied that the general laws of the country afford adequate protection to the

Indian investments.

The period of insurance cover will not normally exceed 15 years in case of projects

involving long construction period. The cover can be extended for a period of 15

years from the date of completion of the project subject to a maximum of 20 years



from the date of commencement of investment. Amount insured shall be reduced

progressively in the last five years of the insurance period.

Exchange Fluctuation Risk Cover

The Exchange Fluctuation Risk Cover is intended to provide a

measure of protection to exporters of capital goods, civil

engineering contractors and consultants who have often to

receive payments over a period of years for their exports,

construction works or services. Where such payments are to be

received in foreign currency, they are open to exchange

fluctuation risk as the forward exchange market does not provide

cover for such deferred payments.

Terms of the Exchange Fluctuation Risk Cover

Exchange Fluctuation Risk Cover is available for payments scheduled over a period

of 12 months or more, upto a maximum of 15 years. Cover can be obtained from the

date of bidding right up to the final installment. At the stage of bidding, an

exporter/contractor can obtain Exchange Fluctuation Risk (Bid) Cover. The basis for

cover will be a reference rate agreed upon. The reference rate can be the rate

prevailing on the date of bid or rate approximating it. The cover will be provided

initially for a period of twelve months and can be extended if necessary. If the bid is

successful, the exporter/contractor is required to obtain Exchange Fluctuation

(Contract) cover for all payments due under the contract. The reference rate for the

contract cover will be either the reference rate used for the Bid Cover or the rate

prevailing on the date of contract, at the option of the exporter/contractor. If the bid is

unsuccessful 75 percent of the premium paid by the exporter/contractor is refunded to

him.

Features

The Exchange Fluctuation Risk (Contract) Cover can be issued, if the payments under

the contract are scheduled to be received beyond 12 months from the date of contract

but in such cases, the cover will apply for any installment falling due within 12

months as well. Cover will be available for all amounts receivable under the contract,

whether it is payment for goods or services or interest or any other payment.

Contracts coming under Buyer's credit and Line of Credit are also eligible for cover

under the schemes.



Currencies covered

Cover under the schemes is available for payments specified in US Dollar, Pound

Sterling, Deustche Mark, Japanese Yen, French Franc, Swiss Franc, UAE Dirham and

Australian Dollar. However, cover can be extended for payment specified in other

convertible currencies at the discretion of ECGC.

Bear / receive loss or gain in exchange rate

The loss or gain within a range of 2 percent of the reference rate will go to the

exporter's account. If the loss exceeds 2 percent, ECGC will make good the portion of

loss in excess of 2 percent but not exceeding 35 percent of the reference rate. In other

words, loss/gain upto 2 percent and beyond 35 percent of the reference rate will be to

the exporter's account. If there is gain in excess of 2 percent and upto 35 percent it

will be turned over to ECGC.


The rate of premium is 40 paise per Rs.100/- per year or 10 paise per Rs.100/- per

quarter for the bid cover. The total premium is payable at the time of issue of the

Policy. Premium for contract cover is also payable at the rate of 40 paise per Rs.100/-

per annum. Ten percent of the total premium payable and premium for the first two

years should be paid at the time of issue of the Policy. Thereafter, the annual premium

will have to be paid in such a manner that premium for two years ahead is always kept

paid to the Corporation.

Exchange Fluctuation Risk Cover will normally be provided along with suitable credit

insurance cover. There is, however, provision to grant the cover independently also in

which case premium will be loaded by 20%.

These schemes are targeted at specific audiences such as banks, investors in foreign

countries and ex

Guarantees to Banks

Packing Credit Guarantee

Timely and adequate credit facilities at the pre-shipment stage are essential for

exporters to realize their full export potential. Exporters may not,

however, be easily able to obtain such facilities from their

bankers for several reasons, e.g. the exporter may be relatively

new to export business, the extent of facilities needed by him



may be out of proportion to the equity of the firms or the value of collateral offered by

the exporter may be inadequate. The Packing Credit Guarantee of ECGC helps the

exporter to obtain better and adequate facilities from their bankers. The Guarantees

assure the banks that, in the event of an exporter failing to discharge his liabilities to

the bank, ECGC would make good a major portion of the bank's loss. The bank is

required to be co-insurer to the extent of the remaining loss.

Loans and advances for Packing Credit Guarantee

Any loan given to an exporter for the manufacture, processing, purchasing or packing

of goods meant for export against a firm order or Letter of Credit qualifies for

Packing Credit Guarantee. Pre-shipment advances given by banks to parties who enter

into contracts for export of services or for construction works abroad to meet

preliminary expenses in connection with such contracts are also eligible for cover

under the Guarantee. The requirement of lodgment of Letter of Credit or export order

for granting packing credit advances is waived if the bank grants such advances in

accordance with the instructions of the Reserve Bank of India in that respect.

General conditions

The Guarantee, issued for a period of 12 months based on a proposal from the bank,

covers all the advances that may be made by the bank during the period to an

individual exporter within an approved limit. The bank is required to submit monthly

declarations of advances and repayments and to pay premium at the rate of 13 paise

per Rs.100 per month on the highest amount outstanding on any day. Approval of

ECGC has to be obtained if the period for repayment of any advance is to be extended

beyond 360 days from the date of advance. The bank will be entitled to claim 66 2/3%

of its loss from ECGC if the entire amount due from the exporter is not recovered

within a period of 4 months from the due date of repayment. The claims are payable if

ECGC is satisfied that the bank had conducted the account with normal banking

prudence and has also complied with the terms and conditions of the Guarantee.

Benefits

ECGC issues Whole-turnover Packing Credit Guarantee (WTPCG) to banks which

undertake to obtain cover for packing credit advances granted to all its customers on

all-India basis. In consideration of the large volume of business offered for cover and

the spread of risks that will thus become available to it, the Corporation grants a

higher percentage of cover, lower premium rate and considerable reduction in

procedural formalities.



Applicable of premium rates

A differential premium rate is now applicable for the banks, which have opted for

WTPCG. The rates vary between 7 paise to 10 paise per Rs.100 per month payable on

the average outstanding for the month. The rate for each bank is fixed based on the

actual claim premium ratio for the bank for the period of immediately preceding five

years. The percentage of cover is normally 75% for most of the banks (except a few

banks for which it is 65%, taking into account the extremely high claim premium ratio

of those banks). There is a reduction of 10% in the cover if the total advance

sanctioned to any particular exporter exceeds the total premium received from the

bank (for all the accounts put together) in the immediately preceding year; even in

respect of such exporters, the lower percentage of cover will apply only for the

advances sanctioned over and above the value of such total premium.

Export Production Finance Guarantee

The purpose of this Guarantee is to enable banks to sanction

advances at the pre-shipment stage to the full extent of cost of

production when it exceeds the f.o.b. value of the contract/order, the

differences representing incentive/duty drawback receivable.

Premium covered

The extent of cover and the premium rate are the same as for Packing Credit

Guarantee. Banks which have opted for WTPCG are eligible for concessionary

premium rate.

Post-Shipment Export Credit Guarantee

Packing credit sanctioned, if any, to an exporter is treated as repaid once the exporter

effects the shipment and submits the export documents to the

bank. If the exporter intends to continue the credit facilities till

the value of shipment is realised from the foreign buyer, he has

to avail of post-shipment credit. The post shipment credit

guarantee provides protection to banks against non-realisation

of export proceeds and the resultant failure of the exporter to

repay the advances availed.



Post-shipment finance given to the exporters by banks through purchase, negotiation

or discount of export bills or advances against bills sent on collection basis qualifies

for this guarantee. It is necessary, however, that the exporter concerned should hold

suitable policy of ECGC to cover the overseas credit risks. The premium rate for this

guarantee is 7 paise per Rs.100 per month. The percentage of loss covered under the

Individual Post-Shipment guarantee is 75.

Individual Post-Shipment Credit Guarantee can also be obtained for finance granted

against L/C bills, even where an exporter does not hold an ECGC Policy, provided

that the exporter makes shipments solely against Letters of Credit. The premium rate

for this cover is 10 paise per Rs.100 per month on the highest amount outstanding on

any day during the month and the percentage of cover is 75. Advances against bills

under Letters of Credit/confirmed orders from banks/buyers in countries placed under

restricted cover shall, however, be subject to prior approval of the Corporation.

Available benefits to banks

This guarantee can also be issued on whole turnover basis, offering a higher

percentage of cover at a reduced rate of premium. The percentage of cover under the

Whole-turnover Post shipment Guarantees is 90 for advances granted to exporters

holding ECGC policy. Advances to non-policyholders are also covered with the

percentage of cover being 65. The premium rate is 5 paise per Rs.100/- per month if

advances against L/C bills are also covered under the guarantee and 6 paise otherwise.

Export Finance Guarantee

This guarantee covers post-shipment advances granted by banks to exporters against

export incentives receivable in the form of cash assistance, duty

drawback, etc.

Features of Export Finance Guarantee

The premium rate for this guarantee is 7 paise per Rs.100 per

month and the cover is 75 percent. Banks having WTPSG are

eligible for concessional premium rate and higher percentage of

cover.

Export Performance Guarantee



Exporters are sometimes called upon to execute bonds duly

guaranteed by an Indian bank at various stages of export

business. An exporter who desires to quote for a foreign tender

may have to furnish a bank guarantee in the form of a bid bond.

If he wins the contract, he may have to furnish bank guarantees

to foreign buyers to ensure due performance or against advance

payment or in lieu of retention money or to a foreign bank in

case he has to raise overseas finance for his contract. Further, for obtaining import

licenses for raw materials or capital goods, exporters may have to execute an

undertaking to export goods of a specified value within a stipulated time, duly

supported by bank guarantees. Bank guarantees are also furnished by exporters to the

Customs, Central Excise, or Sales Tax authorities for the purpose of clearing goods

without payment of duty or for exemption from tax for goods procured for export.

Exporters may also be required to furnish guarantees in support of export obligations

to Export Promotion Councils, Commodity Boards, and The State Trading

Corporation of India, the Minerals and Metals and Metals Trading Corporation of

India etc.

An export proposal may be frustrated if the exporter's bank is unwilling to issue a

guarantee, which the exporter may be required to furnish. The Export Performance

Guarantee provided by ECGC is aimed at helping the exporter in such cases. The

Guarantee, which is in the nature of a counter guarantee to the bank, is issued to

protect the bank against losses that it may suffer on account of guarantees given by it

on behalf of exporters. This protection is intended to encourage banks to give

guarantees on a liberal basis for export purposes.

Normally, cover is extended upto 75 percent of loss in the case of guarantees in

connection with bid bonds, performance bonds, advance payment and local finance

guarantees and guarantees in lieu of retention money. In the case of bid bonds relating

to exports on medium/long term credit, overseas projects, and projects in India

financed by international financial institutions as well as supplies to such projects,

ECGC is agreeable to issue Export Performance Guarantee on payment of 25% of the

prescribed premium. The balance of 75% becomes payable by the bankers if the

exporter succeeds in the bid and gets the contract.

Applicable of Premium rates



While the premium rate for guarantee issued to cover bond relating to exports on

short-term credit is 0.90% p.a. for 75% cover, it is lower for bonds relating to exports

on deferred credit and projects, namely 0.80% p.a. for 75% cover and 0.95% p.a. for

90% cover.

Export Finance (Overseas Lending) Guarantee

If a bank financing an overseas project provides a foreign currency

loan to the contractor, it can protect itself from the risk of non-

payment by the contractor by obtaining Export Finance (Overseas

Lending) Guarantee.

Applicable of Premium rates

The premium rate is 0.90% per annum for 75% cover and 1.08% per annum for 90%

cover. Premium is payable in Indian Rupees. Claims under the Guarantee will also be

paid in Indian Rupees.

ECGC in today’s market

Many countries of the world have started adopting market oriented economy and the

world is being integrated into a global village. The market oriented economy also

means that there will be keen competition in all entrepreneurial activity and the fittest

will only survive. The emphasis will be on quality, price offer competitive prices

industries will necessarily have to give greater importance to research and

development and mass production. There will be more collaboration and technology

and capital are bound to flow to developing countries where the production costs are

cheaper. With mass production the companies cannot contend with only domestic

trade and are compelled to consider the world as a market to increase their sales. This

being the scenario, there will be grater trade among countries resulting in new entrants



in the export - import trade. Besides, quality and price, credit is going to play an

important role in clinching an export deal. Credit while becoming an instrument in

expanding export trade will increase payment risks in our export transaction.

Payments for exports are always opened to risks at the best of times. The risks have

assumed even larger proportions today, due to the political and economic changes that

are sweeping the world over. It is in such a situation the need for export credit

insurance is felt, even for credit transactions which are normally considered as safe.

Export Credit Guarantee Corporation of India Ltd. has been providing the facility of

export credit in the country since it was set up in the tear 1957. It is the oldest export

credit insurance agency in the developing world. ECGC is a company wholly owned

by the Government of India and functions under the administrative control of the

Ministry of Commerce. The primary goal of ECGC is to support and strengthen the

export promotion drive in India by providing a range of credit risk insurance covers to

exporters against loss in export

ECEG Has designed several schemes of Guarantees to Banks

with a view to enhancing the creditworthiness of the exporters

so that they would be able to secure liberal and adequate

facilities from their bankers.

of goods and service also by offering guarantee covers to banks and financial

institutions of enable exporters to obtain better facilities from them.

ECGC basically provides two types of services. Export Credit insurance policies are

issued to the exporters protecting them from credit related risks and enabling them to

expand their export trade. ECGC insures exporters against the risks of not being paid

by the overseas customers. There risks include default or insolvency of the buyer,

exchange difficulties which may block or delay remittance and new restrictions on

imports imposed in the buyer's country. The corporation issues Specific policies for

exports of high value goods where payment are normally made on deferred terms.

Such exports are in the nature of export of capital goods, constructions works, turnkey

jobs or rendering services abroad.

Guarantees to Banks: Timely and adequate credit facilities, at the pre - shipment as

well as post - shipment stage are essential for exporters to realize their full export

potential.



Exporters may not however, be able to obtain such facilities from their bankers for

several reasons e.g., the exporter may be relatively new to export business the extent

of facilities needed by him may be out of proportion to the equity of the firm or the

value of the collaterals offered by the equity of the firm or the value of the collaterals

offered by the exporter may; be inadequate. ECGC has designed several scheme of

Guarantees to Banks with a view to enhancing the creditworthiness of the exporters so

that they would be able to secure liberal and adequate facilities from their banks. The

Guarantees seek to achieve this objective by assuring the banks that in the event of an

exporter failing to discharge his liabilities to the banks and thereby making the bank

incur a loss, ECGC would make good a major portion of the bank's loss. The bank is

required to be co - insurer to the extent of the remaining loss. Any amount recovered

from the exporter subsequent to payment of claims shall be shared between the

corporation and the bank in the same ratio in which the loss was borne by them at the

time of settlement of claim. Recovery expenses shall be first change on the amounts

recovered.

Exim Bank, ECGC, MIGA Partnership

New Partnership Provides Package of Financing and Insurance Solutions for

Indian Companies Investing Overseas

Export-Import Bank of India (Exim Bank), Export Credit Guarantee Corporation of

India Ltd. (ECGC) and the World Bank's Multilateral Investment Guarantee Agency

(MIGA) have formed a partnership that will provide a package of services that

combines competitively-priced financing with risk mitigation to Indian companies

investing overseas.

The objective is to support the outward expansion Indian companies, as they

increasingly seek opportunities to invest overseas. Outbound foreign direct investment

by Indian companies is about $1 billion a year and growing.



"By providing financing and risk mitigation tools, the partnership between MIGA,

Exim Bank and ECGC would cater to the needs of the Indian enterprise and

encourage them in venturing abroad with higher level of confidence", said Mr. T.C.

Venkat Subramanian, Chairman & Managing Director of Exim Bank, during the

launch of the partnership in Mumbai.

Under the new arrangement, Exim Bank will provide the needed financing, while

ECGC and MIGA will provide insurance against the risks that are out of investors'

control such as currency inconvertibility and transfer restrictions; expropriation; war,

terrorism and civil disturbance; and breach of contract.

MIGA and ECGC will work together largely through reinsurance/co-insurance

arrangements. Investors can opt for either financing or insurance or the combined

package of services. Additionally, investors can interact locally with ECGC while still

benefiting from the World Bank's involvement.

MIGA's presence brings the World Bank umbrella of deterrence against host

government actions that might affect project viability, says Luis Dodero, Vice

President and General Counsel of MIGA. "MIGA's involvement can help protect

investments, and in the event that disagreements do occur between investors and host

governments, MIGA can mediate disputes and prevent claims from arising and

disrupting projects." MIGA also brings unparalleled knowledge of country conditions

and opportunities in developing countries, as well as international best practice in

terms of environmental and social standards.

Investors will able to take advantage of all the benefits of partnership with the World

Bank without having to interact directly with MIGA staff in Washington DC. Says

Mr. P.K. Dash, Chairman-cum-Managing Director of ECGC, "The new arrangement

will have a very strong impact on efficiency and turnaround time. Investors can, for

example, work with a primary contact at ECGC who coordinates the process and

eliminates duplication. Documentation for the non-commercial risk insurance aspect

of the partnership has been standardized by MIGA and ECGC."



Exporter's Credit Insurance

ECGC JOINS HANDS WITH SIB UNDER BANCASSURANCE MODEL:

Export Credit Guarantee Corporation of India (ECGC) has appointed SIB as its

Corporate Agent on 28.10.2003 to market their Exporter’s credit insurance policies.

As SIB is already extending the Life and Non-Life insurance facilities, it is now

equipped to cover the entire range of insurance products under one roof.

ECGC, a Government of India enterprise established to promote Export / Import in

our country, provides a range of credit risk insurance covers to exporters against loss

in export of goods. SIB with more than 400 branches across 14 States will facilitate

the distribution of credit policies of ECGC. The customers of other banks may also

approach SBI.



QUESTIONAARIES

1. In what way ECGC’s is different from other insurance company?

2. Objective of ECGC?

3. Necessary documents required by ECGC while exporting?

4. ECGC’s roles in today’s market?

5. Why company/customer come for ECGC?

6. Tax benefits are available incase of ECGC?

7. What types of care ECGC provide to their customers.

8. What kinds of problem do the management has to suffer?

9. In today’s market which product of ECGC are in more demand?

10. What are the main reasons for profitability of the ECGC?



11. How ECGC motivate their Employee?

12. Do ECGC gives training/career growth to their employees or any other such kinds of helps to motivate their employees?

13. Upto what extent ECGC provide credit guarantees?

14. As per the name suggest it is an export company then also expect exporter any one else can adopt ECGC products and services?

15. What kinds of problem are mostly faced by customer and how to try to manage it?

16. In brief explain the organization structure of ECGC? What types of duties they provide by them?

17. What are the main areas of risks faced by your ECGC? How you manage those risks?

18. According to you, where will ECGC in future?

Answers

1. As per the name suggest it is an export credit guarantees corporation we insure and cover the export goods then either then anything else. As per there are many more insurance company who like to compete with us they are also insuring the export goods but the products which we have is different from other insurance companies and people are satisfied with our products and services and they like to prefer this products.

2. The objectives of insurance company are as follow:-

1. To encourage, facilitate and develop trade between India and other countries.

2. To provide investment insurance to Indian investors undertaking investments

in foreign countries.

3. To operate the various schemes in such a manner that the Corporation would

generate enough surpluses to enable it to meet any losses that may result from

unforeseen political situations.



4. To introduce new product lines so as to diversify into trade related services.

3. Code document & submitted approval to office address.

4. As per today situation our country is in a stage of growing if it will not export it

will not survive in today market to be in competition the company needs to export

their goods. While exporting the goods there is always a fear in the minds of

customers or company to avoid that risks the company go for ECGC.

5. ECGC plays quite good role in today’s market. As per the many company are

exporting their product in international markets to compete with other exporting

country. ECGC encourage their customer to export their products by insuring their

goods.

6. No, as far as ECGC is concern there is no tax benefits are available.

7. ECGC gives much important to their customer. As far as any insurance company’s

agent concern they try to solve the problem of their customer by giving proper advice

to their customers.

8. The first main problem of the management has to suffer in point of claim

settlement. While claiming the policy the customer has to claim within the 30 days.

Customer knows all the facts but still they blame the management of the company.

9. Leather and garments.

10. Working of the employees.

11. By giving performance appraisal and by promoting them, increments and etc.

12. Yes, for further studies they encourage their employees by giving proper facilities

such as paying fees. And other types of helps but if the employees are not serious

about it and they fails or leave their studies in middle then they have to bear the loss

and what the company has given to them they have to return back to the company or

if they pass in the exam they have to submit all the relevant thing with the pass result.



13. It depends upon the policy. If no application for credit limit on a buyer has been

made, ECGC accept liability as under:-

Commercial risks upto Rs. 10,00,000 for DP/CAD transactions on a particular buyer

subject to the condition that claims will be limited to two buyers during the currency

of the policy.

Commercial risks upto a maximum of Rs.7,50,000 for DA transactions and Rs.

20,00,000 for DP/CAD transactions provided that.

a) At least three shipments have been effected by the exporter to the buyer during

the preceding 2 years on similar payment terms and at least on of them was

not less than the discretionary limit availed of by the exporter and

b) The buyer had made payment for the shipment on the due dates.

14. No

15. Customer mostly finding the problem while settlement of claims & filling the

procedures. They try to solve their problem of their customer.

16. The organization structure of the ECGC has six sectors (two business and four

control, support and administrative sectors) as under:

1. Large Exporters and Bank Sector

2. Small and Medium Exporters Sector

3. Finance Sector

4. Internal Audit Sector

5. Corporate Sector

6. Company Secretariat and Legal Affairs Sector

Activities undertaken in these sectors are provided

They request exporters and banks to

• contact the Division Heads as per details given to obtain the services.



• send proposals for our schemes in the prescribed

Format

• Visit to their website for the further details.

17. It has great future, no export no future .to be in the international market each and

every company has to export their products.

TIME NORMS FOR APPROVAL OF CREDIT LIMIT

APPLICATIONS AND SETTLEMENT OF CLAIMS

Sr. no Indicators

SURVEY REPORT

As ECGC is an oldest corporation then also their no other company to compete with

ECGC. ECGC till today are in booming stage as per the survey is considered the

customers are satisfied with the management activities. Management tries to solve the

customer problem and give proper advice to their customers to create confidence

amongst the customers. According to my point of view I came across many such

government company are not performing their work properly and they are showing

laziness in their work where as ECGC is concern they are satisfying their customer by

giving proper facilities to their customer. Governments are keen to promote exports

because exports improve a country’s balance of payments position. For this reason,

governments in various countries provide export insurance cover through government

or the quasi- governmental organizations.



Experience of my survey doing I receive good feedback from the ECGC customer. as

every coin has to face the customer are satisfied with all the activities of the

corporation but still human wants are unlimited as much we get the much more we

want, the much more we get the still more we want. They need some improvement

in their working activities.

TIME NORMS FOR APPROVAL OF CREDIT LIMIT

APPLICATIONS AND SETTLEMENT OF CLAIMS

Sr.No. Indicators Units

(No. of days)

1. Average time taken for approval

of credit limit applications



a) for overseas buyers on record 9

b) for new overseas buyers 14

2. Average time in days taken for

Settlement of claims

i) Under short term policies

a) 25% claims 27

b) 75% claims 81

ii) Under short term guarantees 135

OUR COMMITMENT TO

CLIENTS WITH GRIEVANCES

The clients seeking redress of the grievances with Branches under various Regional

Offices can expect

That grievances shall be acknowledged and

forwarded to concerned higher authority within 15 days

Visitors to our office will be treated with

Courtesy and heard patiently to facilitate

Solving of their problems.



WE REQUEST THE CLIENTS WITH

GRIEVANCES TO:

Approach concerned Branch Manager / Regional Manager of ECGC

Provide a clear statement of grievance giving the background of

officials previously approached for redress

Understand that some grievances take some time to redress

Visit our website www.ecgcindia.com for details


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