Commerce Ministry through ECGC raises Insurance cover for Banks up to 90% for Working Capital Loans- (Press Information Bureau) (16 Sep 2019)

MANU/PIBU/1423/2019

Insurance

Union Minister of Commerce & Industry and Railways, Piyush Goyal informed about the details of the Export Credit Insurance Scheme (ECIS). The scheme was announced by the Finance Minister, Nirmala Sitharaman, as part of measures to boost exports, on 14th September 2019 in New Delhi.

Due to the global slowdown and rising NPAs, banks are in stress and therefore require additional support. Finance Ministry has taken steps towards merger of Banks and has infused additional capital to the banks. In order to facilitate banks further Ministry of Commerce & Industry has enhanced Insurance cover for Banks up to 90% for the working capital loans and moderation in premium incidence for the MSME sector. Enhanced cover will ensure that Foreign and Rupee export credit interest rates will be below 4% and 8% respectively for exporters.

The stimulus package will catalyze Banks to enhance volume of export credit lending particularly to the MSME Sector with optimal pricing due to capital and risk optimization. The existing covers issued by Export Credit Guarantee Corporation of India (ECGC) will continue for the existing customer banks and similar covers will also be made available to all other banks. All standard accounts covered under ECGC as on the date of transition, shall be eligible for cover under the ECIS. The scope of cover has been enlarged to cover not only the principal outstanding but also for the unpaid Interest (for a maximum of two quarters or the NPA date, whichever is earlier).

ECGC is a fully Government of India owned company established in the year 1957 to promote exports by providing credit insurance services. ECGC provides Export Credit Insurance to Banks (ECIB) to protect the Banks from losses on account of export credit at the Pre and Post-Shipment stage given to exporters due to the risks of insolvency and/or protracted default of the exporter borrower.

Tags : EXPORT CREDIT INSURANCE COVER ENHANCEMENT