A PRESENTATION ON THE CREDIT INSURANCE PRODUCTS

EXPORT CREDIT INSURANCE

• Credit Insurance CoversCredit Insurance Covers to exporters against Credit Risk to exporters against Credit Risk losses in export of goods & services both under Short term losses in export of goods & services both under Short term and Medium and LTand Medium and LT

• CreditCredit Insurance covers Insurance covers to banks to protect them against to banks to protect them against risks of non payment by exporters both under Short term risks of non payment by exporters both under Short term and Medium and LTand Medium and LT

• Domestic Credit Insurance Domestic Credit Insurance covers tocovers to Exporters and Exporters and Banks in respect of their local sales and working capital Banks in respect of their local sales and working capital finance, respectivelyfinance, respectively

• Overseas Investment InsuranceOverseas Investment Insurance covers covers to protect to protect Indian Entrepreneurs investing in Overseas Ventures Indian Entrepreneurs investing in Overseas Ventures (Equity/Loans) against expropriation risks(Equity/Loans) against expropriation risks

• Exchange Fluctuation Covers Exchange Fluctuation Covers to exporters to protect to exporters to protect them in respect of their exchange losses under Medium and them in respect of their exchange losses under Medium and LT exportsLT exports

ECGC – AN EXPORT PROMOTION INSTITUTION

• Provides credit risk covers to Exporters against non payment risks of the overseas buyers / buyer’s country in respect of the exports made.

• Provides credit Insurance covers to banks against lending risks of exporters

• Assessment of buyers for the purpose of underwriting

• Preparation of country reports• International experience to enhance Indian

capabilities• An ISO organisation excelling in credit insurance

services

A BRIEF PROFILE OF ECGC

• No. of offices 5 Regional offices and 51 Branches No. of offices 5 Regional offices and 51 Branches

( Head office and all Branches ISO certified)( Head office and all Branches ISO certified)

• Paid Up Capital Rs 900 CrPaid Up Capital Rs 900 Cr

• Reserves Rs 913.42 CrReserves Rs 913.42 Cr

• IRDA registered Insurance company classified under General Insurance-Specialised IRDA registered Insurance company classified under General Insurance-Specialised

InstitutionInstitution

Data for 2007-08Data for 2007-08

• Premium Income Rs 668.36 CrPremium Income Rs 668.36 Cr

• Claims paid Rs 419.74 CrClaims paid Rs 419.74 Cr

• Recoveries Rs 161.50 CrRecoveries Rs 161.50 Cr

• No. of Policies in force 12533No. of Policies in force 12533

• No. of shipments covered 364848No. of shipments covered 364848

• No. of buyers covered 46799No. of buyers covered 46799

• No. of countries covered 193No. of countries covered 193

• No. of banks holding covers 65No. of banks holding covers 65

• No. of bank branches covered 3709No. of bank branches covered 3709

• No. of exporters financed by banks 20568No. of exporters financed by banks 20568

STATISTICSParticulars Initial Years (1957-60) 2007-08

Premium Rs 43,109 (1957-58) Rs 668.36 crores

Claims Rs 4.51 lacs (1960) Rs 419.74 crores

Recoveries Rs 2.00 lacs (1960) Rs 161.50 crores

Value of shipments covered

Rs 1.30 crores(1957 -58) Rs 52766.57 crores

Policies in Force 146 no. (1957-58) 12533 no.

No. of banks covered under Guarantees

3 no. (1960) 65

No. of bank branches

3 no. 3709 no.

Paid up Capital Rs 50.00 lacs Rs 900 crores

Payment Risk

EXPORT EXPORT INSURANCEINSURANCE

Goods Receivables

Exchange Risk

Loss or Damage

Marine Insurance

Hedging by Authorized

Dealers

CREDIT INSURANCE

LC

RISKS

POLITICAL RISK (Open Cover

and Restricted cover )

COUNTRY BUYER BANK

LC / NON – LC

COMMERCIAL RISK

RISKS COVERED BY ECGC

RISKS COVERED

COMMERCIAL RISKS

• Insolvency of buyer/LC opening bank• Protracted Default of buyer• Repudiation by buyerPOLITICAL RISKS

• War/civil war/revolutions• Import restrictions• Exchange transfer delay/embargo• Any other cause attributable to importing

country

PRODUCTS OFFERED TO EXPORTERS

• Standard Policy • Small Exporters policy• Specific Shipment Policy (short term)• Export Turnover policy• Specific buyer wise policy• Consignment export policy• Global entity policy• Single buyer exposure policy• Multi buyer exposure policy• Software project exports policy• IT enabled (single customer) policy• IT enabled (multi customer) policy• SME Policy• Customer specific policy (Tailor made)

SHIPMENTS ( COMPREHENSIVE RISKS) POLICY

• Whole Turnover principle- all exports covered• Selective options for

LC/Associates/Consignments• 90% cover • Advance Premium subject to Minimum

premium of Rs.10,000/-• Policy Period - 2 years• Credit limit (Drawee wise) on all the buyers• Monthly declarations with premium due• Premium rates schedule issued with Policy• No claim Bonus – every year 5% subject to

maximum of 50%

SMALL EXPORTERS POLICY

• Export turnover not exceeding Rs.50 Lakhs per annum• Advance Premium subject to Minimum

Premium Rs.2000/-• Policy Period - one year• Cover for Commercial risks 95% and Political risks 100%• No Claim bonus applicable• Quarterly Declarations• Premium payment as per standard

premium schedule attached to Policy

EXPORT TURNOVER POLICY

• Minimum anticipated Premium of Rs.10 Lakhs• Period of Policy- One year• Monthly or quarterly declaration as per exporter’s

choice• Higher Discretionary Limit of drawee wise limits

on buyers (uptoRs100 lakhs for DP and Rs50 lakhs for DA)• Premium rates discounted by 20%• Premium payable upfront or in Quarterly

instalments based on anticipated exports• 5% cash discount for upfront payment of full

annual premium

SPECIFIC SHIPMENT POLICY (SSP)

• Covering one shipment or One contract • Processing fee of Rs.1000/- • 80% cover• Premium higher than standard premium

rates• Upfront premium before issue of Policy• Commercial / Political risks and L/C

comprehensive risks covered• Submission of Shipment Statement and

realisation report later

SPECIFIC BUYER WISE POLICY• Covering One buyer / One Bank • Processing fee Rs.1000/-• Period of cover - One year• All shipments to buyer on Non LC terms or

shipments under LC from bank covered• Quarterly/Annual premium payable upfront

based on projected exports• 80% cover• Monthly or quarterly shipment statements• 5% No Claim Bonus reduction on renewal

BUYER EXPOSURE POLICY

• Cover issued on exposure basis as opposed to turnover ( Exposure: Likely outstanding at any given point of time)

• One time payment of premium on exposure• Single Premium rate based on country rating for

Comprehensive risks/Political risks• Processing fee Rs.1000/- on application• Cover is up to Exposure or the Loss limit (Credit Limit)• Premium payable either quarterly or annually on the

loss limit• No monthly statements• Annual statement of shipments at the end of Policy

period on renewal• Coverage is 80%• Selective cover for each buyer at exporter’s discretion

MULTI BUYER EXPOSURE POLICY• Cover on exposure as opposed to turnover and cover for more

than 1 buyer• Discretion to choose buyers for cover with exporter and shall

be acceptable to ECGC• Processing Fee Rs.5000/- to accompany application• List of buyers to be given with proposal and any addition to be

advised• Minimum 10% of projected turnover will be fixed as Aggregate

Loss Limit (ALL) which will be the Maximum Liability• Exporter can opt for higher exposure than 10% of turnover• Cover for each buyer is 10% of ALL as Single Loss Limit (SLL) • Exporter to have access to ECGC website for checking defaulter

buyer list. • Coverage is 80% and lower cover available with proportionate

reduction of premium. Single premium rate irrespective of country grading

• Upfront premium payable before issue or in quarterly instalments

• 5% No Claim Bonus reduction on renewal

CONSIGNMENT (STOCK HOLDING AGENT) POLICY

• Consignment exports covered under this exclusive cover for a period of 1 year

• Premium on shipments to the agent payable on the turnover• Upfront premium quarterly / annually• Coverage 80%. Exporters holding Standard Policy will get

90% cover• One Agent / Multiple buyers• Cover on agent or on ultimate buyers as desired by exporter• Credit limits (Drawee wise limits) to be obtained on ultimate

buyers• Discretionary Credit limit available upto 5% of turnover with

max of Rs100 lakhs• Longer period of 360 days for realization of bills• Premium payable on the basis of country classification and

tenor of 90/180/360 days. Extension upto 540 days permissible with additional premium

• 5% No Claim Bonus reduction on renewal

CONSIGNMENT EXPORTS (GLOBAL ENTITY) POLICY

• Coverage for selling goods through exporter’s own subsidiary or branch office during a period of 1 year

• Premium on shipments to the GE payable on the turnover• Upfront premium quarterly / annually• Coverage 80%. Exporters holding Standard Policy will get 90%

cover• One GE / Multiple buyers• Cover on GE or on ultimate buyers as desired by exporter• Commercial cover of Insolvency of GE only if Joint stock

company and equity stake not exceeding 49%; Otherwise only Political risks cover

• Credit limits (Drawee wise limits) to be obtained on ultimate buyers

• Discretionary Credit limit available upto 5% of turnover with max of Rs100 lakhs

• Longer period of 360 days for realization of bills• Premium payable on the basis of country classification and tenor

of 90/180/360 days. Extension upto 540 days permissible with additional premium

• 5% No Claim Bonus reduction on renewal

MSME POLICY

• Policy issued for small exporters with Export Turnover not exceeding Rs10 Lakhs and registered under MSME Act, 2006• Cover available upto Rs10 lakhs with

annual premium of Rs 5,000 and a processing fee of Rs1,000• Cover available will be 90%• Maximum claim payable is Rs3 lakhs

on any buyer • No requirement of monthly declaration

of shipments

EXPORT FACTORING SERVICES

• Factoring services involving finance, credit protection, collection under one roof• Finance against export receivables facilitated

through a bank• Credit protection available after assessment

of buyers• Receivables financed without recourse• 80% prepayment against invoices and

balance after 90 days from due date less charges, if payment not received• Details available on specific request at

factoring@ecgc.in

EXPORT CREDIT INSURANCE COVERS TO BANKS

• Covers for working capital granted by commercial banks to Exporters at Pre shipment and Post shipment stages• Covers available on exporter wise, bank branch

wise and bank wise• Losses due to protracted default / Insolvency of

exporters covered• Cover varies from 60% to 95% depending on

the type of cover

EXPORT STIMULUS PACKAGE• Additional cover of 5%, subject to maximum

protection of 95% available for all MSME exporters• All exporters of Textiles ( including handicrafts and

handlooms), Gem & jewellery, leather, engineering goods, carpets, project goods, auto components and chemicals will also get the additional protection of 5%

• Additional cover through the National Export Insurance Account of the GOI

• Bank advances to MSME borrowers for exports will get an additional protection of 10% subject to maximum protection of 85% under the Credit Insurance covers to banks

• Additional cover available for shipments /advances made/ granted during the period 1st Jan 09 to 30th June 09