PREPARED BY: VISHAL SINGH(110251) TRINATH(110247)

INTRODUCTION
Export Credit Guarantee of India Ltd. Was set up in the

year 1957 by Government of India.

It was introduced to strengthen exports by covering the

payment risk.
It provide credit risk insurance to Indian exporters in a

manner to help them to do export free from the fear of loss.

ECGC functions as an export promotion organization

under the administrative control of the ministry of

commerce, Govt. of India.
It is the 5th largest credit insurer in the world.

SERVICES PROVIDED BY ECGC

Offers more competitive payment terms to their foreign buyers.

ECGC helps them borrow working capital from commercial banks at

special rates for their export transaction.

It also provides a credit check on foreign buyers.

ECGC has tied up with Dun & Bradstreet corporation and together they

have launched a website called www.indiaexportregister.com

It also helps exporters in India to market their products to buyers

across the world.

BENEFITS OF ECGC- To Indian Exporters

Offers insurance protection to exporters against payment risk.

Makes it easy to Indian exporters to obtain export finance from

banks/financial institutions.
Makes available information to exporters on different countries with its

own credit ratings.

Provides information to exporters in India on credit-worthiness of

foreign importers.
Provides guidance to Indian exporters in export related activities.
Helps exporters in recovering bad debts.

ECGC PRODUCTS AND SERVICES- Offerings

STANDARD POLICY Standard policy offers to cover risks in respect of all shipments on Short-term credits(credit not exceeding 180 days) by exporters with an anticipated annual turnover of more than 50lakhs. This policy is also called Shipment(Comprehensive Risk) Policy or SCR. Standard Policy covers the following commercial and political risks from the date of shipment.

Commercial Risks
Insolvency of the buyer.

Failure of the buyer to make the payment due within a

specified period, normally four months from due date.

Buyers failure to accept goods, subject to certain condition.

POLITICAL RISKS
Imposition of restriction by the govt. of the buyers country

or any govt. action, which may block or delay the transfer of payment made by the buyer.
War, Civil war, revolution or civil disturbance in the buyers

country.
Any other cause of loss occurring outside India, not

normally insured by general insurer, and beyond the

control of both exporter and buyer.

Turnover Policy
Turnover policy is a variation of the standard policy for the

benefits of all large exporters who pay a total premium of Rs. 10 lakhs or more in a year.
The policy provides additional discount in premium with an

added incentive for increasing exports beyond the projected turnover and also offers simplified procedures for premium remittance and filing of shipment information.

 It also provides for higher discretionary credit limits on

overseas buyers, based on total premium paid by the

exporter under the policy.
The turnover policy is used with a validity period of one

year.
Premium calculated on the projected turnover are payable

in four quarterly installments.

 At the end of the year, If the premium payable on the basis

of the actual turnover is less than the premium paid on the basis of the projected turnover, the excess amount paid will be carried forward to the next policy period which could be adjusted in the premium for the first quarter of the renewed policy. In case the policy is not renewed, and if the difference between premium paid and premium payable is more than 10%, the same will be refunded, subject to marginal adjustments.

Small Exporters Policy

This is another version of the Standard Policy, aimed at encouraging small exporters to obtain and operate the policy. It is issued to exporters whose anticipated exports turnover for the period of one year does not exceed Rs. 50 lakhs. Features : It is issued for the period of 12 months. Premium payable is 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%. Shipment need to be declared quarterly.

 Small exporters are required to submit monthly declarations of all

payments remaining overdue by more than 60 days from the due date.
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.
The normal waiting period for claims under the Small Exporters Policy

is two months.

Specific Shipment Policy (Short-Term)

Specific Shipment Policies- Short-Term(SSP-ST) provides cover to Indian exporters against commercial and political risks involved in export of goods on short-term credit not exceeding 180days. Exporters can take cover under these policies for either a shipment or a few shipment to a buyer under a contract. These policies can be availed by: I.Exporters who do not hold SCR Policy. II.Exporters having SCR Policy, in respect of shipment permitted to be excluded from the purview of the SCR policy.

Different Types of SSP-ST Policy

Specific Shipments(commercial and political risks) Policy- Short

term.
Specific Shipments(political risks) Policy- Short-Term. Specific Shipment(insolvency or default of L/C opening bank and

political risks) policy-Short-Term.

Risks Excluded From The Scope Of SSP-ST

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

exporters obtains a degree from a competent court of law in the buyers country
in his favour.
Causes inherent in the nature of goods. Buyers failure to obtain necessary import or exchange authorization from

authorities in his country.

Insolvency or default of any agent of the exporters or of the collecting bank. Loss or damage to goods. Exchange rate fluctuation. Failure of exporters to fulfill terms of export contract or negligence on his part.

Buyerwise Policy(Short-Term)
Buyerwise policy- Short-Term(BP-ST) provides 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). The different types of Buyerwise policies and their risk coverage are same as those of the SSP-ST with the difference that here the policies relate to a particular buyer.

The exporters has to submit a proposal in the prescribed form and has to be submitted before making the shipment and the cover would be given only from the date of receipt of proposal. The policy would be valid for a period of one year. The percentage of cover normally available under the policy would be 80% of the gross value of the shipments covered. However, the policy could also be issued with a lower % of cover with proportionate reduction in the amount of premium payable.

Consignment Exports policy

Consignment exports are increasingly being used as a method to compete in international markets. Under this system, goods are shipped and held in stock overseas, ready for sale to overseas buyers, as and when orders are received.

To protect Indian exporters from possible losses when selling goods to ultimate buyers, ECGC has introduced the Consignment Policy Cover.

There are two policies available for covering consignment exports:

Consignment Exports (Stock-holding agent) Policy. 2. Consignment Exports (Global Entity) Policy.
1.

Presentation on Export Credit Guarantee Corporation of India

NAME OF THE BOOK. EXPORT & IMPORT MANAGEMENT AUTHOR NAME : - ASSEM KUMAR COVERING FORM PAGE 256-268

IT- Enabled Services(Specific Customer) Policies

It is a policy issued to cover Commercial &

Political Risks involving in IT-enabled services to a particular customer. ITES provides cover in respect of contracts for providing services during period with billing on the basis of services rendered during a period e.g. a week, month or quarterly, In which services rendered will be paid in foreign exchange. It has certain standard terms & conditions as per the norms & practices of the ITES export Industry

Important Features of ITES Contract

1. Contract Provided for specific Services during a

defined period. 2. Billing would be for the service rendered during a specific time period. The contract should stipulate the manner for assessment of service rendered, periodicity of billing, manner of acceptance & due date for payment of bills. 3. Non payment problem arise 1. 2. 3.

Certain services Invoiced & accepted but not paid. Certain services Invoiced & not accepted. Certain services rendered but yet to be invoiced

Important Features of ITES Contract

4. Certain cases like- No Physical Document all

process are taken by electronic media including billing. 5. The contract could also provide for detection of mistakes or errors while rendering the service and procedure for correction. Since there could be any penalties or reduction in payment for errors & Omissions.

Highlight Of ITES Policy

Schedule Report Like Monthly declaration indicating

services rendered, invoices raised & invoices paid will be submitted by exporters in prescribed form. No un due report is necessary. The policyholder has to specify in advance, the manner in which the work in process would be estimated. E.g. Volume of work done & rate to be applied on the defined unit. Liability of ECGC would be for services rendered and reported in the monthly declaration. ECGC will have the right to examine the books of accounts & other documents of the exporter, either by ECGC or authorized agency prior to admission of claim.

Highlight Of ITES Policy

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 errors & omissions Cover will be given only up to 80% Documentary required for the Policy would be specified separately for each type of risk taking into consideration the special nature of the transaction. Prior to admission of claims, ECGC, may seeks a verification of exporters books of account either by its own officers or by outside professionals.

Insurance Cover for Buyers Credit & Line of Credit

Buyers Credit refers to credit extended by a bank in

India to foreign buyer enabling him to pay for machinery & equipment that he may be importing from India for a specific Project.

Line of Credit is a credit extended by a bank of India to

an overseas bank, institution or government, for the purpose of facilitating import of a variety of listed goods from India into the foreign country

Cover can be granted either for political Risks(Lower

rates return) or for comprehensive Risks(Higher rates return)

Guarantee Given to bank

Packaging Credit Guarantee to enable to provide pre-

shipment advances to exporter for manufacturing, processing, purchasing or packing of goods meant for exporter against a firm export order. Export Production Finance guarantee to enable bank sanction advances at the pre shipment stage to the full extent of cost of production where it exceeds the Free on board. Post shipment Credit Guarantee to enable banks to extend post-shipment finance to exporter through purchase, negotiation or discount of export bills or advances against such bills Export Finance Guarantee covers post-shipment advances granted by banks to exporters against export incentives like duty drawbacks

Guarantee Given to bank

Export Performance Guarantee a counter-guarantee

to protect a bank against losses that it may suffer on account of guarantee given by it on behalf of the exporters Export Finance(Overseas Lending) Guarantee to protect a bank financing an overseas project, by providing a foreign currency loans to the contractor from the risk of non-performance

Maturity Factoring
ECGCs Maturing Factoring scheme has certain

unique features & does not exactly fit into the conventional mould of maturity factoring. The feature intended to give the exporter the benefits of full factoring services through the Maturity Factoring Scheme, thus effectively addressing exporters need to avail advance on receivables, for their working capital requirements.

Maturity Factoring
The Services are 100% credit guarantee protection

against

bad debts sales register maintenance in respect of factored transactions Regular monitoring of outstanding credit Facilitating due collection in the due date of recovery, at its own cost, of all recoverable bad debts

Payment would be received by the exporter, in his a/c,

through normal banking channels. In the event of nonrealization of dues on factored export receivables, ECGC will promptly make the payment in Indian currency of an equivalent amount, immediately upon the crystallization of dues by the bank.

Maturity Factoring
Major benefits to the Exporter are: Easier Credit terms to overseas customer, better protection Friendly Delivery terms Reduced foreign bank handling charges on documents Substantial cost saving Increase in export Sales Better Security than letter of Credit Elimination of uncertainties Full attention to procurement/production, mktg & sales and growth of business due to freedom from chasing receivables.

Procedure to avail the facility of maturity factoring

Forwarding formal Application to the nearest office

of ECGC Furnish full information with regard to business, including overseas customer information, & the bills in respect of whom are to be factored. Get pre-approval by ECGC & have a Permitted Limit established on each one of the overseas customers

Procedure to avail the facility of maturity factoring

Factoring Agreement with ECGC & offer to ECGC for

factoring all future export transactions of DA/OD terms with those buyer on whom a PL has been established. Approach exporters bank for arranging advances on such factored receivables, & notify the name of the bank to ECGC to enable them to communicate to the bank, the limit established on each customer Ensure due performance of obligations to the buyer under export contract/purchase order

Special Schemes by ECGC

Transfer Guarantee to safeguard banks in India

against losses on account failure of a foreign bank to reimburse it with amount paid to an exporter, when an Indian bank has added a confirmation to letter opened by the foreign bank Overseas Investment Insurance to cover the risk on account of war, expropriation or restriction on remittances to Indian investments made by way of equity capital or untied loan for the purpose of setting up or expansion of overseas projects. Exchange Fluctuations Risk Cover to provide protection from exchange rate fluctuations to exporter of capital equipment, civil engineering etc. who have to receive payment over a period of years for their exports, construction works, or services

Special Schemes by ECGC

Constructions Work Policy to provide cover to an

Indian contractor who executes a civil construction job abroad. Specific Policy for Supply Contract to cover risks in respect of export of capital goods or turnkey projects involving medium/long term credit.

Transit Risks
Risk related to transportation of goods from

exporters Country to the importer. There are chances of physical losses at each stages during transits. Transits Risks Include the following

Standard Risk perils of the seas fortuitous accident or casualties of the seas Exceptional Risk of transport like war, strikes, & terrorism etc.

All the overseas transits are subjected to ICC

enumerated by Lloyds Underwriter & technical Committee, London.

Transit Risks and Marine Insurance

TR is covered by Marine Insurance(an agreement

whereby the insurer undertakes to indemnify the assured, in the manner & to the extent thereby agreed, against marine losses, and the losses incidental to marine adventure) Marine Insurance internationally accepted The two parties involved in a marine insurance transaction are the insurer and assured. E.g. Insurance company = insurer and Assured or insured is the party who seeks Insurance Marine Policies, extend to all modes of transport

Marine Insurance Provider

Government Owned UIICL (United India Insurance Company Limited) NICL(National Insurance Company Limited) NIACL(New India Assurance Company Limited) OICL(Oriental Insurance Company Limited) Private Player Cholamandalam MS General Insurance Bajaj Allianz Iffco Tokio GI ICICI Lombard

Export Contract
Export

Contract determine who pays for the insurance & obtains the Policy. The Most common Export Contract are

FOB (Free On Board) Buyer is responsible for Insurance C & F (Cost & Freight) Buyer is responsible for Insurance CIF(Cost, Insurance & Freight) Exporter is responsible for insurance from his own premises to that of the purchaser

The rate of premium for Marine insurance depend upon the nature of goods, mode of transit, package type, voyage route & past claims experience.

Institute Cargo Clauses

The ICC (three clauses A, B & C)/ Policy cover

ICC (C): Fire, lightning, stranding, grounding, sinking or capsizing of vessel or craft, overturning or derailment of land conveyance, collision or contract of vessel, craft or conveyance with any external object other than water, discharge of cargo at a part of distress, general average sacrifice. ICC (B): Earthquake, Volcanic eruption or lightening, washing overboard, entry of sea, lake or river water into vessel, craft, hold, conveyance, container, lift, van or place of storage, in addition to the perils of ICC (C) ICC (A):
Willful misconduct, Ordinary Leakage, loss in weight or volume or wear & tear Inherent vice or nature of the subject-matter Delay howsoever caused Insolvency or financial default of the carrier.

Event of Loss, Compensation offered by Insurance Company

Actual Total Loss: It is the total Physical loss of the

subject matter Constructive total Loss: It occurs where saving or salvaging the subject matter damaged is possible but economically unviable General average (Partial loss) Its a risk specific to marine transport.(Sifting transport in order to control total losses) Particular average (Partial loss): Refers to physical loss or damage or less in weight or quality. Expenses Payable: The expense payable incurred to prevent damage to the subject matter from the insured risks

Marine Insurance Policies offer the following features & benefits

Cargo policies are freely assignable Marine policies are agreed value policies Existence of insurable interest needs to be

established only at the time of loss An element of profit can also be included in the sum insured, which is allowed by the insurers Marine policies are transit/voyage policies and not limited to any specific period The interpretation & applicability of various statues, the legislation in various countries, port conditions, customs procedures and legal systems in various part of the world, govern the operation & interpretation of a Marine Insurance Policy

Types of Marine Cargo Policies for exporter/ Importer

Specific Policy

Open Cover
Special Declaration Policy Muti-transit/Stock throughout Policies

Duty Insurance Policy

Sellers Contingency Policy Package Policy for Plantation Owners(Tea, coffee,

rubber, cardamom) Increase Value Insurance Policy

Method of claim Under Marine Policies

Immediate Step to minimize loss Inform the nearest Insurance office Arrange for joint ship survey or port survey Lodge Monetary Claim Submit duly assigned insurance policy along with Invoice &

other document

Bill of Landing/AWB/GR Packing list Copies of correspondence exchanged with carriers Copy of notice served on carriers along with acknowledgement/ receipt Shortage/ Damage Certification issued by carriers

Survey fee to be paid to the surveyor by the Insurance

Company

Exchange Rate Fluctuation Risks

Foreign exchange Rate

1. Spot Rates
2. Forward Rates o Foreign Exchange fluctuation Risks

o Option dated Forward contract

o Foreign Currency Options o Currency Swaps

THANK YOU