ECGC Launches Scheme to Provide Enhanced Export Credit Risk Insurance Coverage of up to 90% to Small Exporters

The ECGC has launched a new scheme that provides small exporters with enhanced export credit risk insurance coverage of up to 90%. Under the Export Credit Insurance for Banks Whole Turnover Packaging Credit and Post Shipment Scheme, AECGC has introduced a new scheme to provide enhanced export credit risk insurance coverage to the extent of 90% to assist small exporters.

The scheme is expected to benefit a number of small-scale exporters who obtain export credit from banks that hold ECGC WT-ECIB covers. This will also allow small exporters to explore new markets/new buyers and competitively diversify their existing product portfolio.

ECGC Chairman M Senthilnathan said today at a press conference in Mumbai, "We expect the cover to play a game-changing role." We anticipate that this will increase the percentage of accounts with up to Rs. 20 crore, providing additional stability to the ECGC portfolio." "By providing 90 percent cover to banks, we expect more small companies to obtain export credit from banks, greatly benefiting these industries," he added. We anticipate that banks will make additional concessions. The net effect will be beneficial to exporters, as interest rates will be reduced."

"The Government supported us with adequate capital infusion in recent years," ECGC Chairman said, thanking the Commerce Ministry and Minister Piyush Goyal. This, combined with the need to make our coverage more beneficial to exporters, has led us to make the decision announced today."

In explaining the role of the Government of India's premier Export Credit Agency, Senthilnathan said, "The countercyclical role played by organizations like ECGC is similar to that of a fireman; when credit is suffering, credit insurance agencies step in to stabilise the market."

According to Senthilnathan, all governments took various measures to stabilize the market in light of pandemic, as a result of which ECGC has not withdrawn cover provided to exporters, and, contrary to expectations, export credit insurance agencies all over the world have witnessed only average levels of claim ratios, rather than high ratios.

Enhanced Cover to Banks:

• The enhanced cover will be available to manufacturer-exporters who have received a fund-based export credit working capital limit of up to 20 crore (i.e., total Packaging Credit and Post Shipment limit per exporter/exporter-group), excluding the Gems, Jewellery, and Diamond sector and merchant exporters/traders.

• This new scheme will allow banks holding ECGC's WT-ECIB cover to investigate the possibility of further lowering interest rates, benefiting all stakeholders. Because of its favorable claim premium ratio, the enhanced cover percentage will be made available to the State Bank of India at the previous year's premium rate. Other banks, on the other hand, may see a moderate increase in the current premium rates.

ECGC provided export assistance totaling Rs.6.18 lakh crore in the fiscal year 2021-22. As of 31 March 2022, over 6,700 distinct exporters had benefited from direct cover issued to exporters, and over 9,000 distinct exporters had benefited from Export Credit Insurance for Banks (ECIB). Notably, approximately 96% of these are small.