ECGC (EXPORT CREDIT GURANTEE CORPORATION OF INDIA)-

Export Credit Guarantee Corporation of India Ltd was build to support the promotion of the exports of an organization. It covers the risk of export on credit. ECGC was established in 1957. Export Credit Guarantee Corporation is an export promotion company that works under the command of the Department of Commerce, Ministry of Commerce & Industry and Government of India. This organization is under the management of Board of Directors. The board consists of representatives of the Reserve Bank of India, Government, insurance, banking and exporting community. In terms of coverage of national exports, Export Credit Guarantee Corporation is the fifth leading credit insurer across the globe. ECGC offers covers of credit risk insurance to the exporters. It also provides assurance to the financial institutions for the benefit of the exporters. For investing in the joint ventures abroad it offers Overseas Investment Insurance to the companies of India. The investment is done in the form of loan or equity. The services provided by ECGC under its export maturity factoring scheme are 100 per cent credit guarantee protection against bad debts, sales register maintenance in respect of factored transactions, and regular monitoring of outstanding credits, facilitating due collection in the due date of recovery, at its own cost, of all recoverable bad debts. Payments would be received by the exporter, in his account, through normal banking channels. In the event of non-realization of dues on factored export receivables, ECGC will promptly make the payment in Indian currency of an equivalent amount, immediately upon the crystallization of dues by the bank (exchange rate applicable, as on the date of crystallization). The Corporation would facilitate easier availability of bank finance to its factoring clients by rendering such advances to be an attractive proposition

to banks. The factoring agreement that would be concluded by ECGC with its clients has an in-built provision incorporating an on-demand guarantee in favor of the bank without any payment or compliance or other requirements to be satisfied by the bank. Export Credit Guarantee Corporation of India Ltd helps the exporters in various ways. Some of them include: Offering insurance protection to exporters against payment risks Making it easy to obtain export finance from banks/financial institutions Providing information on credit-worthiness of overseas buyers Assisting exporters in recovering bad debts Making information available on different countries with its own credit ratings Option to give easier credit terms to customers better protection than an ILC, without the need to insist on establishing one. Reduced foreign bank handling charges on documents. Follow up (telephones, faxes, follow-up visits) of receivables, overdue bank interest on delayed collections and recovery expenses relating to bad debts. Increase in export sales, thanks to more competitive terms offered to customers. Better security than letters of credit. Elimination of uncertainties relating to realization of accounts receivables resulting in better cash management to meet working capital requirements. Full attention to procurement/production, marketing and sales and growth of business, due to freedom from chasing receivables. For banks, it would be a win-win situation all the way. Advances given against ECGC-factored export receivables could become the most preferred

export advance portfolio for a bank, even better than the advances granted under an ILC. There is 100 per cent credit protection, free of cost.

BENEFITS TO BANKS Prompt and immediate payment by ECGC of the full amount outstanding on the receivables to the bank, within three days of crystallization of the dues, in the event of non-realization of factored receivables on the due date, without any protracted processing or scrutiny and without raising any queries. Savings on post-shipment guarantee premium to be paid to ECGC, if any. No pre-disbursal risk assessment or post-disbursal monitoring required of the bank. Full risk is on ECGC, with regard to repayment of the amount due (in rupees). Opportunity to build 'zero-risk assets', since the bank would not run any risk on the borrower, the country or on the buyer. Banks could earn interest on a priority sector lending, without any of the attendant risks or hassles. Opportunity to satisfy additional working capital needs of the customer by sanctioning additional limits without enlarging the exposure risks. Banks would be furnished with a certified copy of the factoring agreement concluded between the client and ECGC. When a limit is established by ECGC on an overseas customer in favor of an exporter-client, the Corporation would directly communicate to the concerned bank branch all relevant details of the limit available to the exporter on that specified overseas customer, and would confirm in writing its obligations to the bank in respect of advances it may grant against such ECGC-factored export receivables. The bank's role lies in encouraging exporter-customers to explore the possibility of availing of the factoring facility from ECGC. Factoring,

being a high-risk premium product, could be made available only in respect of receivables due from select customers. Export Credit Guarantee Corporation of India Ltd offers various services and products to the people. There are several credit insurance policies, guarantees to banks and special schemes as well. Standard policies, small exporters' policy, buyer exposure policy, software project policy, ITenabled services, construction work policy and service policy are some of the credit insurance policies offered.