ECGC guarantees exporters to provide cost-effective credit insurance coverage
Rs. 4,400 crore capital injection will help expand our services: CMD Senthilnathan
By GDP Bombay
Mumbai, October 1, 2021
ECGC Ltd. (formerly Export Credit Guarantee Corporation) has assured exporters that it will not increase the insurance premium and will continue to offer credit insurance coverage at the same cost, despite the disruption caused by the COVID-19 pandemic. Speaking to the media and exporters in Mumbai, ECGC Chairman and CEO Shri M. Senthilnathan said that “all claims payable will be duly paid and we have sufficient financial resources to deal with any increase in claims. “.
The media interaction took place in light of the recent Union Cabinet decision to infuse Rs. 4,400 crore in additional capital and list the company on the stock exchange. Shri Senthilnathan said: “Government support is very timely and adequate. This will strengthen our financial strength not only to make claims payments, but also to expand our services. “
“There is a huge opportunity for a country like India, where international companies around the world are looking to seriously diversify their sources of supply. Now is the right time and we are sure that we will be able to expand our services according to the growing export demand from India, ”added Shri Senthilnathan.
Speaking about the huge opportunities that await India’s export sector, he explained how the V-shaped recovery (after the pandemic), as seen in most countries, will positively contribute to export growth. international goods. “It is predicted that international merchandise exports will grow 3.1% per year through 2030 to reach $ 26 trillion.”
Senthilnathan explained ECGC’s commitment to increase exports. He expressed ECGC’s desire to partner with like-minded institutions, such as SIDBI, which is trying to identify new companies and start-ups to export indigenous products that are advanced and using new technologies.
The president also spoke about the crucial role played by the ECGC during the pandemic to support the country’s export sector. “When many private insurers withdrew from the market (due to the pandemic), we expanded our coverage in 2020. We are like firefighters”.
The CMD further stated that unlike other countries, in India the government has created a special purpose vehicle in the form of the National Export Insurance Account (NEIA) program to support exports and ensure that the trust is funded out of a leverage ratio of 1:20, so the risk is borne by the trust and is also supported by government funding. The Union Cabinet also approved the injection of a grant of Rs 1,650 crore over five years.
Speaking on future plans, CMD said the ECGC is taking the assistance of the Indian Institute of Foreign Trade to identify sectors with high intensity of credit insurance and export.
In a presentation given at the event, Managing Director, ECGC, Shri Nirdosh Chopra informed that ECGC has paid approximately Rs. 7,500 Crore debts over the past five years, thus helping exporters as well as banks to run their business without delay.
He said the capital injection will allow ECGC to issue insurance coverage that can support additional exports of 5.28 lakh crore over the five-year period. “The injection of capital into ECGC will allow it to extend its coverage to the export-oriented industry, in particular the labor-intensive sector. The approved amount will be paid in installments, thus increasing the risk underwriting capacity up to 88,000 crore. ”
ECGC list in exercise 22-23
ECGC is expected to be publicly traded during the 2022-2023 fiscal year. This should help the company adopt better corporate governance practices and mobilize market resources through the IPO in the future.
ECGC was established in 1957 for the purpose of promoting the country’s exports by providing credit risk insurance and related services for exports. It operates under the administrative control of the Ministry of Commerce and Industry. Over the years, she has designed various export credit risk insurance products to meet the requirements of Indian exporters and commercial banks providing export credits. The company is headquartered in Mumbai and has branches in major cities of India.
The official ECGC press release on cabinet decisions is available here.