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EXPORT CREDIT GURANTEE CORPORATION OF INDIA LTD.

In order to provide export credit and insurance support to Indian exporters, the GOI has set up the Export Risks Insurance Corporation (ERIC) in july ,1957 it is known as ECGC of India LTD. ECGC is wholly owned by the GOI.

Objectives of ECGC
To protect the exporters against credit risks,i.e. non-repayment by buyers. To protect the banks against losses due to non-repayment of loans by exporters.

Cover Issued by ECGC

Standard Policies:- issued to exporters to protect them against payment risks involved in exports on short term credit. Specific Policies :- designed to protect Indian firms against payment risk involved in (i) exports on deferred terms of payment (ii)services rendered to foreign parties (iii)Construction works and turnkey projects undertaken abroad.

 Financial Gurantee:-issued by banks in Indian to protect them from risk involved in their extending financial support to exporters at preshipment and post-shipment stages. Special Schemes:-Such as Transfer Gurantee eant to protect banks which add confirmation to letter of credit opened by foreign banks.

STANDARD POLICIES
The standard policy is issued in the case of consumer goods ,which are sold on credit not exceeding 180 days. All shipments are covered under one policy for a period of 180 days.

1.Shipments (Comprehensive Risks)Policy:-to cover both political and commericial risks from the date of shipment. 2. Shipments (Political Risks)Policy:-to cover only political risks from the date of shipment. 3.Contracts (Comprehensive Risks)Policy:-to cover both political and commericial risks from the date of contracts. 4.Contracts (Political Risks)Policy:-to cover only political risks from the date of contract.

ECGC has designed 4 types of policies to provide cover for shipment made on short term credit

Risks Covered by ECGC

RISKS
POLITICAL RISK (Open Cover and Restricted cover )

COMMERCIAL RISK

COUNTRY

BUYER

BANK

LC / NON LC

LC

RISKS COVERED
COMMERCIAL RISKS
Insolvency of buyer/LC opening bank Protracted Default of buyer Repudiation by buyer

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

SPECIFIC POLICIES
1. Specific policy for supply contracts 2. Service policy 3. Construction works policy:-This policy covers civil construction jobs as well as turnkey projects involving supplies and services. This policy covers construction contracts both with private and foreign government.

FINANCIAL GURANTEES
1.Packing Credit Gurantee 2.Export Production Finance Guarantee(covers preshipment cost) 3.Export Finance Guarantee(covers post- shipment cost)In case the exportes does not repay the loan, then the banks suffered loss. The loss insured is upto three fourths or 75%. 4.Post-shipment Export Credit Gurantee 5.Export Performance Gurantee

 6.Export Finance Guarantee:-If a bank financing an overseas project provides a foreign currency loan to the contractor, it can protect itself from the risk of non payment by the contractor by obtaining this guarantee .The loss covered under this policy is to the extent of 75% to 90% depending upon premium rate