Export Credit Schemes

Subject :Economy

Context:

Export financing declined at around 28 per cent during the first seven months of the current fiscal.

Details:

RBI data-export credit has fallen from Rs 23,330 crore as on March 25, 2022 to Rs 16,909 crore as on October 21, 2022.

Concept:

Export Credit Guarantee Corporation of India

ECGC Ltd. (Formerly known as Export Credit Guarantee Corporation of India Ltd.) wholly owned by the Government of India (Ministry of Commerce and Industry), was set up in 1957 as Export Risks Insurance Corporation with the objective of promoting exports from the country by providing credit risk insurance and related services for exports.
- After the introduction of insurance covers to banks during the period 1962-64, the name was changed to Export Credit & Guarantee Corporation Ltd in 1964.
- It was changed to ECGC Ltd in August 2014.
Its objective was to promote exports from the country by providing credit risk insurance and related services for exports.
ECGC provides
- The ECGC provides a range of credit risk insurance covers to exporters against loss in export of goods and services due to commercial risks, economic risks, political risks and payment risks.
  - ECGC classifies the countries into seven categories in the ascending order of risks perceived.
- Different types of credit insurance covers to banks and other financial institutions to enable them to extend credit facilities to exporters and
- Export Factoring facility for MSME sector which is a package of financial products consisting of working capital financing, credit risk protection, maintenance of sales ledger and collection of export receivables from the buyer located in an overseas country.

National Export Insurance Account (NEIA) Scheme:

NEIA Trust was established in 2006 to promote project exports from India that are of strategic and national importance.
It promotes Medium and Long Term (MLT)/project exports by extending (partial/full) support to covers issued by ECGC to MLT/project export.
Exim Bank, in April 2011, in conjunction with ECGC Ltd., introduced a new initiative, viz. Buyer’s Credit under the NEIA scheme, under which the Bank finances and facilitates project exports from India.

NIRVIK Scheme:

Export Credit Guarantee Corporation of India (ECGC) has introduced the Export Credit Insurance Scheme (ECIS) called NIRVIK to enhance loan availability and ease the lending process.
It is an insurance cover guarantee that will cover up to 90% of the principal and interest. The cover will include both pre and post-shipment credit.
The ECGC currently provides credit guarantee of up to 60% loss.
The enhanced cover will ensure that Foreign and Rupee export credit interest rates will be below 4% and 8% respectively for exporters.