FUNCTIONS OF ECGC PDF

The Group handles projects and export transactions in the agricultural sector for financing. The group handles credit proposals from SMEs under various lending programmes of the Bank. Grant of loans and advances in India solely or jointly with commercial banks to persons exporting or intending to export India goods which may include the export of turnkey projects and civil consultancy services. Grant of lines credit to Governments, financial institutions and other suitable organizations in foreign countries to enable person outside India to import from India, goods including turnkey projects, civil construction contracts and other services including consultancy services. Handling transaction where a mix of government credit and commercial credit for exports is involved.

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It was transformed into export credit guarantee corporation limited ECGC in It functions under the administrative control of the Ministry of Commerce and is managed by a Board of Directors representing government, Banking, Insurance, Trade and Industry. The ECGC with its headquarters in Bombay and several regional offices is the only institution providing insurance cover to Indian exporters against the risk of non-realization of export payments due to occurrence of the commercial and political risks involved in exports on credit terms and by offering guarantees to commercial banks against losses that the bank may suffer in granting advances to exports, in connection with their export transactions.

Cancellation of export license or imposition of new export licensing restrictions in India after the date of contract under contract policy. Payment of additional handling, transport or insurance charges occasioned by interruption or diversion of voyage that cannot be recovered from the buyer.

Contracts for export of capital goods or turnkey projects or construction works or rendering services abroad are not of a repetitive nature.

Such transactions are, therefore, insured by ECGC on a case-to-case basis under specific policies. It can be of any of the four forms: Specific Shipments Comprehensive Risks Policy to cover both commercial and political risks at the Post-shipment stage.

Specific Shipments Political Risks Policy to cover only political risks after shipment stage. Specific Contracts Comprehensive Risks Policy to cover political and commercial risks after contract date.

Specific Contracts Political Risks Policy to cover only political risks after contract date. Where Indian firms render such services they would be exposed to payment risks similar to those involved in export of goods. Such risks are covered by ECGC under this policy. If the service contract is with overseas government, then Specific Services political risks Policy can be obtained and if the services contract is with overseas private parties then specific services comprehensive risks policy can be obtained, especially those contracts not supported by bank guarantees.

Normally, cover is issued on case-to-case basis. This policy covers construction contracts both with private and foreign government. ECGC backs the lending programmes of banks by issuing financial guarantees. The guarantees protect the banks from losses on account of their lending to exporters.

Six guarantees have been evolved for this purpose:- i. Packing Credit Guarantee ii. Export Production Finance Guarantee iii. Export Finance Guarantee iv. Post Shipment Export Credit Guarantee v. Export Performance Guarantee vi. Export Finance Overseas Lending Guarantee.

These guarantees give protection to banks against losses due to non-payment by exporters on account of their insolvency or default. The ECGC charges a premium for its services that may vary from 5 paise to 7.

The premium charged depends upon the type of guarantee and it is subject to change, if ECGC so desires. Pre-shipment advances given by banks to firms who enters contracts for export of services or for construction works abroad to meet preliminary expenses are also eligible for cover under this guarantee. ECGC pays two thirds of the loss. The guarantee under this scheme covers some specified products such a textiles, woolen carpets, ready-made garments, etc and the loss covered is two third.

In case, the exporter Does not repay the loan, then the banks suffer loss? These schemes are provided o the banks and to the exporters. This sort of financing facilitates immediate payment to exporters and frees them from the problem of credit management. ECGC has evolved this scheme to protect financial institutions in India which extent export credit to overseas buyers or institutions.

Overseas Investment Insurance: with the increasing exports of capital goods and turnkey projects from India, the involvement of exporters in capital anticipation in overseas projects has assumed importance. ECGC has evolved this scheme to provide protection for such investment.

Normally the insurance cover is for 15 years. Related Articles:.

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Export Credit Guarantee Corporation of India (ECGC)

Over the years it has designed different export credit risk insurance products to suit the requirements of Indian exporters. ECGC is essentially an export promotion organization, seeking to improve the competitiveness of the Indian exports by providing them with credit insurance covers. The Corporation has introduced various export credit insurance schemes to meet the requirements of commercial banks extending export credit. The insurance covers enable the banks to extend timely and adequate export credit facilities to the exporters. ECGC keeps its premium rates at the optimal level.

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Functions of Export Credit Guarantee Corporation of India

It was transformed into export credit guarantee corporation limited ECGC in It functions under the administrative control of the Ministry of Commerce and is managed by a Board of Directors representing government, Banking, Insurance, Trade and Industry. The ECGC with its headquarters in Bombay and several regional offices is the only institution providing insurance cover to Indian exporters against the risk of non-realization of export payments due to occurrence of the commercial and political risks involved in exports on credit terms and by offering guarantees to commercial banks against losses that the bank may suffer in granting advances to exports, in connection with their export transactions. Cancellation of export license or imposition of new export licensing restrictions in India after the date of contract under contract policy. Payment of additional handling, transport or insurance charges occasioned by interruption or diversion of voyage that cannot be recovered from the buyer. Contracts for export of capital goods or turnkey projects or construction works or rendering services abroad are not of a repetitive nature. Such transactions are, therefore, insured by ECGC on a case-to-case basis under specific policies.

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History[ edit ] ECGC Ltd, was established in July, to strengthen the export promotion by covering the risk of exporting on credit. It is managed by an Asset Management Company comprising representatives of the Government, Reserve Bank of India, banking, insurance and exporting community. ECGC Ltd is the seventh largest credit insurer of the world in terms of coverage of national exports. The present paid-up capital of the company is Rs. Offers guarantees to banks and financial institutions to enable exporters to obtain better facilities from them.

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