ECGC Enhances Insurance Cover Benefits for Exporters

On Tuesday, the Export Credit Guarantee Corporation (ECGC) introduced a new scheme to give exporters enhanced export credit risk insurance amid heightened uncertainties in global trade. This new scheme provides small exporters a credit risk insurance coverage up to 90% under the Export Credit Insurance for Banks Whole Turnover Packaging Credit and Post Shipment (ECIB-WTPC & PS).

The State Bank of India (SBI) has signed up under the ECIB-WTPC & PS and agreed to grant export credit at the repo rate plus 1.3%. The enhanced credit risk cover has come when the current account deficit is widening, and the Ministry of Commerce intends to promote exports.

There is an expectation that other banks will also sign up for this scheme, according to the ECGC officials. This scheme would benefit many small-scale exporters availing export credit with the banks they hold the ECGC WT-ECIB covers. It will also enable the exporters to explore new buyers and markets and diversify their existing product portfolio to remain competitive.

The financing under this scheme could be packing credit/pre-shipment or post-shipment lending. The risk insurance covers have been designed to encourage banks to provide need-based and adequate credit facilities for export. The products offered to banks are known as the Export Credit Insurance for Banks (ECIB), categorised as commercial products.

The ECGC Chairman, M. Senthilnathan, stated that they expect more small companies to get export credit from banks by giving 90% cover to banks, thus benefiting the export industries. The net effect will help the exporters by involving an interest rate reduction.

The ECGC stated that it had extended support to exports amounting to Rs.6.18 lakh crore in the last FY22. As of 31 March 2022, more than 6,700 distinct exporters benefitted from the direct cover given to exporters and more than 9,000 distinct exporters benefitted under the ECIB. About 96% of these exporters are small exporters.

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