Kolkata: Export Credit Guarantee Corporation (ECGC) has no plans to hike premium on its insurance coverage in near future. The coverage is offered to Indian exporters and bankers to protect them against payment defaults by overseas buyers. In a related move to make insurance coverage more attractive among exporters, the Corporation has resolved to expedite claim settlements on payment defaults against exports of Indian goods and services.
In the next MoU with the government, ECGC will make a commitment to settle 50% of the total claims within seven days, instead of ten days being taken now to do the job. The balance claims will be cleared in 50 days in case of micro, small and medium exporters (MSME) and 55 days for general category exporters. The existing time span is about 60 days. The next MoU, due for 2009-10, is expected to be signed at the beginning of the year.
“Exporters are increasingly becoming aware about the benefit of taking risk coverage for their exports, especially after the outbreak of financial turmoil and economic slowdown in the global space. This tendency is being more noticed among pharmaceutical, ready-made garments, and gems and jewellery exporters who have been hit hard due to the meltdown in markets like the US and the UK,” ECGC executive director S Prabhakaran told ET.
Already, claims against non-receipt of payments have started pouring in from those sectors. For instance, the insurer has cleared an insurance claim of Rs 23.5 crore, which was raised by a jewellery exporter from the eastern region for not getting back export receivables from a buyer in Hong Kong. With the ready-made garment exporters facing problems in getting their payments from the US market, ECGC has settled claims of Rs 95 crore last month against payment defaults by two American buyers.
Even as claims against payment defaults are expected to go up this year, it would not have any adverse impact on ECGC’s income. This is reflected in the growth of premium income in the current year, which grew 14% to Rs 571 crore till mid-January.
In the next MoU with the government, ECGC will make a commitment to settle 50% of the total claims within seven days, instead of ten days being taken now to do the job. The balance claims will be cleared in 50 days in case of micro, small and medium exporters (MSME) and 55 days for general category exporters. The existing time span is about 60 days. The next MoU, due for 2009-10, is expected to be signed at the beginning of the year.
“Exporters are increasingly becoming aware about the benefit of taking risk coverage for their exports, especially after the outbreak of financial turmoil and economic slowdown in the global space. This tendency is being more noticed among pharmaceutical, ready-made garments, and gems and jewellery exporters who have been hit hard due to the meltdown in markets like the US and the UK,” ECGC executive director S Prabhakaran told ET.
Already, claims against non-receipt of payments have started pouring in from those sectors. For instance, the insurer has cleared an insurance claim of Rs 23.5 crore, which was raised by a jewellery exporter from the eastern region for not getting back export receivables from a buyer in Hong Kong. With the ready-made garment exporters facing problems in getting their payments from the US market, ECGC has settled claims of Rs 95 crore last month against payment defaults by two American buyers.
Even as claims against payment defaults are expected to go up this year, it would not have any adverse impact on ECGC’s income. This is reflected in the growth of premium income in the current year, which grew 14% to Rs 571 crore till mid-January.
Source: The Economic Times
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