Export credit insurance project

EXPORT CREDIT INSURANCE
Payments for exports are open to risks even at the best of times. The risks have
assumed large proportions today due to the far-reaching political and economic
changes that are sweeping the world. An outbreak of war or a civil war may block or
delay payment for goods exported. A coup or an insurrection may also bring about the
same result. Economic difficulties or balance of payment problems may lead a
country to impose restrictions on either import of certain goods or on transfer of
payments for goods imported. In addition, one has to contend with the usual
commercial risks of insolvency or protracted default of buyers. The commercial risks
of the foreign buyer going bankrupt or losing his capacity to pay are heightened due
to the political and economic uncertainties. Conducting export business in such
condition of uncertainty is fraught with dangers.
The loss of a large payment may spell disaster for any exporter whatever his prudence
and competence. On the other hand, too cautious an attitude in evaluating risks and
selecting buyers may result in loss of hard-to-get business opportunities. Export credit
insurance is designed to protect exporters from the consequences of the payment
risks, both political and commercial, and to enable them to expand their overseas
business without fear of loss.
Export credit insurance also seeks to create a favorable climate in which exporters can
hope to get timely and liberal credit facilities from banks at home. For this purpose,
export credit insurer provides guarantees to banks to protect them from the risk of loss
inherent in granting various types of finance facilities to exporters. There some of the
companies providing Export Credit Insurance in India.

Export Credit Insurance (ECGC)
Need for Export credit insurance
Payments for exports are open to risks even at the best of times. The risks have been
assumed large proportion today due to far reaching political and economic changes
that are sweeping the world. An outbreak of war may block or delay the payment for
goods exported. A coup or an insurrection may also bring about the same result.
Economic difficulties or the balance of payment problem may lead a country to
impose restrictions on either import of certain goods or on transfer of payments for
goods imported. In addition, one has to contend with the usual commercial risks of
insolvency or protracted default of buyers. The commercial risks of the foreign buyer
going bankrupt or losing his capacity to pay are heightened due to the political &
economic uncertainties. Conducting export business in such conditions of uncertainty
is fraught with dangers. Export credit insurance is designed to protect exporters from
the consequences of the payment risks, both political and commercial, and to enable
them to expand their overseas business without fear of loss.
The loss of a large payment may spell disaster for any exporter, whatever his
prudence and competence. On the other hand, too cautions an attitude in evaluating
risks and selecting buyers may result n loss of hard-to-get business opportunities.
Export credit insurance is designed to protect exporters from the consequences of the
payment risks, both political and commercial, and to enable them to expand their
overseas business without fear of loss.
Export credit insurance also seeks to create a favorable climate in which exporters can
hope to get timely and liberal credit facilities from banks at home. For this purposes,
export credit insurer provides guarantees to banks to protect them form risk of loss
inherent in granting various types of finance facilities to exporters.
Prevention is better than cure. If your debt had never impacted your business, it
does not cost much to protect yourself against catastrophic losses. Should it have
impacted, and if you were to buy credit insurance, then the premium will be much
higher.
Even though you may have a clean loss history, it is no guarantee that losses could not
be made in the future. Of course a clean loss history will be reflected in the
advantageous premium rate we would offer. No one can be entirely sure about their
Customers focus on export. ECCG cover the risks. 2

own market. When it moves fast, it becomes less predictable. Credit insurance is a
way to streamline your P&L. You pay a reasonable premium each year and you
avoid that 'big hit'.
If there is an impending risk, it will be too late to buy credit insurance. Even with a
well-balanced portfolio, you cannot predict an unexpected claim or catastrophic loss.
Unfortunately unforeseen catastrophes do exist e.g. Fraud of a manager that causes a
company to go insolvent or secondary insolvency, which means the insolvency of a
major buyer of your client that, affects your client's business. You can never be
absolutely sure that you have all the information.

INTRODUCTION ON ECGC
Exporters face a problem of not being paid by the overseas importer because of
various reasons like out break of war or civil war, a coup or an insurrection, economic
difficulties or balance of payment problems faced by importers country and
commercial risks like insolvency or protracted default of buyer. All these reasons may
block the amount or delay the amount. The loss of amount brings a disaster for any
exporter however he is financially sound, intelligent and competent. Export credit
insurance provided by ECGC helps in preventing the above risks. With insurance
cover, exporters can do business confidently and in the process can increase or expand
the business significantly with out fear of loss. This paper examines export insurance
system in the country and the role played by ECGC. Governments are keen to
promote exports because exports improve a country’s balance of payments position.
For this reason, governments in various countries provide export insurance cover
through government or the quasi- governmental organizations.
The Risks covered by the export insurance organizations usually include the
following:-
• Insolvency of the buyer;
• Buyer’s failure to pay on the due date ;
• Action by other governments to block the transfer of funds;
• Action by other governments to confiscate the goods;
• Wars, revolutions and other similar disturbances within the importing country;
• Political events and economic difficulties.
Payments for exports are open to risks even at the best of times. The risks have
assumed larger proportions due to political and economic changes in the world. A
civil war in a country may block or delay the payment for exports. Economic
difficulties or BOP position may also force a country to restrict payments outflow to
the exporter. It is also possible tat the buyer may turn insolvent or may refuse to make
the payment. In light of the above, the export business though may appear lucrative is
fraught with risks.

The government of India set up the export Risks Insurance Corporation (ERIC)
in July 1957 in order to provide export credit insurance support to Indian
exporters. It was transformed into Export Credit Guarantee Corporation of India
Limited in 1983. ECGC is a company wholly owned by Government of India. It
functions under administrative control of the ministry of the commerce and is
managed by Board of Directors representing Government, Banking, Insurance, Trade,
Industry etc. ECGC is the fifth largest credit insurer of the world presently covers
17.31% of India’s total exports with the paid up capital of Rs. 1.50 bn. The present
paid-up capital of the company is Rs.800 crores and authorized capital Rs.1000
crores.

OBJECTIVES
In furtherance of the Mission, the Corporation has set before itself the following
objectives
1. To encourage, facilitate and develop trade between India and other countries.
2. To provide adequate export credit insurance cover, comparable to similar
covers available to exporters in other countries so that Indian exporters would
be able to save themselves from losses that may arise due to credit risks both
commercial and political and also are in a position to maximize their export
business.
3. To provide the banks in India with guarantee covers with a view to enabling
those to extend adequate export credit facilities to the Indian exporters both at
pre-shipment and post-shipment stage.
4. To provide investment insurance to Indian investors undertaking investments
in foreign countries.
5. To operate the various schemes in such a manner that the Corporation would
generate enough surpluses to enable it to meet any losses that may result from
unforeseen political situations.
6. To introduce new product lines so as to diversify into trade related services.
VISION
The vision of Export Credit Guarantee Corporation of India Ltd. is to excel in
providing export credit insurance and trade related services.
MISSION
The Mission of ECGC is to support the Indian Export Industry by providing cost
effective insurance and trade related services to meet the needs of Indian export
market and in doing so, generate an adequate return for our shareholders.

MAJOR FUNCTIONS OF ECGC
1. To provide a range of credit risk insurance covers to exporters against a loss in
export of goods and services.
2. To offer guarantees to banks and financial institutions to enable exporters
obtain better facilities from them.
3. Provides Overseas Investment Insurance to Indian companies investing in
joint ventures abroad in the form of equity or loan
ECGC HELPS EXPORTERS BY
1. Provide insurance protection to exporters against payment risks.
2. Provide guidance in export related activities.
3. Provide information on creditworthiness of overseas buyer.
4. Provide information on about 180 countries with its own credit ratings.
5. Making it easy to obtained export finance from banks/financial institutions
6. Assist exporters in recovering bad debts.
THE NEED FOR A POLICY
Payment for goods shipped by an exporter is open to certain risks, unless the
payment has been received in advance or is supported by an irrevocable L/C
confirmed by the bank India. Failure of a large payment can wreck an
exporter’s business.
In any case, the existence of the risks and the exporter’s knowledge of their
existence may make him adopt a very cautions attitude towards new business.
Orders which could have proved beneficial may be given up because of
excessive caution.
An ECGC policy is designed to protect exporters from losses that may rise due
to a variety of commercial and political risks which are beyond their control,.

Backed by this insurance, an exporter can expand his business by taking on
new buyers, entering new markets or by taking up new products.
The ECGC covers can be divided broadly into four groups:-
Standard Policies issued to:-
• Exporter to protect them against payment risks involved in exports on short-
term credit; and
• Small exporter’s policy to protect them against payment risks involved in
exports on short-term credit.
Specific Policies designed to protect Indian firms against payment risks involved
in:-
• Export on deferred terms of payment;
• Services rendered to foreign parties; and
• Construction works and turnkey projects undertaken abroad.
Financial guarantees issued to
Banks in India to protect them from risks of loss involved in extending their financial
support to exporters at the pre-shipment as well as post-shipment stages; and
Special schemes viz.
Transfer Guaran-tee meant to protect banks which add confirmation to letters of
credit, Overseas Investment Insurance and Exchange Fluctuation Risk Insurance.

PRODUCTS AND SERVICES
CREDIT INSURANCE POLICIES
SCR or Standard Policy
Shipments (Comprehensive Risks) Policy, commonly known as the
Standard Policy, is the one ideally suited to cover risks in respect of
goods exported on short-term credit, i.e. credit not exceeding 180 days.
This policy covers both commercial and political risks from the date of
shipment. It is issued to exporters whose anticipated export turnover
for the next 12 months is more than Rs.50 lacs. (The appropriate
policy for exporters with an anticipated turnover of Rs.50 lacs or less is the Small
Exporter's Policy, described separately).
Risks covered under the Standard Policy
Under the SCR, ECGC covers, from the date of shipment, the following risks:
• Commercial Risks:
1. Insolvency of the buyer;
2. Failure of the buyer to make the payment due within a specified period,
normally 4 months from the date;
3. Buyer’s failure to accept goods, subject to certain conditions.
• Political Risks:
1. Imposition of restrictions by the Government of the buyer’s country or any
Government action which may block or delay the transfer of payment made
by the buyer;
2. War, civil war, revolution or civil disturbances in the buyer’s country; New
import restrictions or cancellation of a valid import license;
3. Interruption or diversion of voyage outside India resulting in payment of
additional freight or insurance charges which cannot be recovered from the
buyer.

4. Any other cause of loss occurring outside India not normally insured by
general insurers, and beyond the control of both the exporter and the buyer.
Risks not covered under the Standard Policy
1. Commercial disputes including quality disputes raised by the buyer unless the
exporter obtains a decree from a competent court of law in the buyer’s country
in his favor;
2. Causes inherent in the nature of goods;
3. Buyer’s failure to obtain necessary import or exchange authorization from
authorities in his country;
4. Insolvency or default of any agent of the exporter or of the collecting bank.
5. Loss or damage to goods which can be covered by general insurers;
6. Exchange rate fluctuation;
7. Failure of the exporter to fulfils the terms of the export contract or negligence
on his part.
Shipments covered under the Standard Policy
The Standard Policy is meant to cover all the shipments made by an exporter, on
credit terms during the period of 24 months after the issue of the policy. In other
words, an exporter is required to offer for the cover of the policy each and every
shipment that may be made by him in the next 24 months on DP, DA or Open
Delivery terms to all buyers other than his own associates.
Shipments excluded
An exporter may exclude shipments made against advance payment or those, which
are supported by irrevocable Letters of Credit, which carry the confirmation of banks
in India, since he faces no risk in respect of such transactions. Exporters of the status
of trading houses and above are allowed to exclude shipments of specified
commodities or shipments to buyers in specified countries or any combination of
these two, from the purview of the Standard Policies held by them.
Shipments against letter of credit
Exporters holding Standard Policy may opt to get shipments against irrevocable Letter
of Credit excluded from the scope of the policy. However, unless they are confirmed
by banks in India, payment under irrevocable Letters of Credit is subject to political
risks. For such shipments, an exporter has option to obtain cover for either political
risks only or for comprehensive risks, i.e., for all political risks and the risk of
insolvency or default of the bank opening the irrevocable Letter of Credit. The

comprehensive risk cover also provides indemnity to the exporter to the extent of 25%
of the gross invoice value if the LC opening bank refuses payment on the ground of
discrepancies in LC, which are not clearly attributable to the exporter. In either case,
cover will be provided by ECGC only if the exporter agrees to get all the shipments
made against irrevocable Letter of Credit covered under the policy. Cover will not be
available for selected transactions.
Shipments are associates
Shipments to foreign buyers who are associates of the exporters, i.e. in whose
business the exporter has a financial interest, are normally excluded from the policy.
They can, however be, covered against political risks under the policy if an exporter
so desires. Where both the exporter and the associate are public limited companies
and where the exporter's share holding in the associate does not exceed 49%, cover
can be provided against insolvency risks in addition to the political risks.
Shipments on consignment basis
Shipments made to overseas agents under consignment basis are excluded from the
scope of the Standard Policy. However, if an exporter wants it, the ECGC can get
them included under the policy, but the cover will be provided only against political
risks, since the agent acts for the exporter, if however, goods are sold to ultimate
buyers on credit term, comprehensive risks cover can be provided for the sales to such
ultimate buyers if the exporter wants such cover.
Air shipments
When shipments are made by air, the buyers are often able to obtain delivery of the
goods from the airlines before making payment of the bills or accepting them for
payment, as the case may be. Earlier such shipments could be covered only if the
exporter was holding appropriate credit limit on open delivery (OD) terms and had
paid premium at the higher rates applicable for OD. ECGC has now decided that
credit limits sanctioned under DA will be valid for OD also. Moreover, for shipments
made after 1st
April, 2003, the premium rates for DA will apply for OD also. As a
result, shipments by air can be covered by the Standard Policy if the exporter holds a
valid credit limit under DA and pays premium at the rates applicable for the relevant
credit period under DA.
Additional cover for shipments to government Buyers
All shipments made to government buyer are covered under the policy against
political risks. The exporter has, therefore, to declare such shipments to the ECGC

and pay premium at the rates applicable for the covering political risks. The ECGC‘s
Specific Approval is required to be obtained where the country is in the list of
Restricted Cover Countries. This cover does not extend to commercial risks like
default or non-acceptance of goods. If an exporter wants these risks also to be
covered, then he is required to write to the ECGC asking that risks number (xi)
described in the policy be also covered and should give information about the name
and address of the address of the buyer, the statues of the buyer and he details of the
contract. If the ECGC approves the request, the shipment concerned will be covered
against comprehensive risks if the exporter pays premium on those shipments at rates
applicable for comprehensive risks. ECGC considers following buyer as Government
Buyers:
• A department of the central Government; and
• If the buyer be a Government body like a Board, State Government,
Municipality or Government owned Corporations/ Companies, if the
performance of the contract is guaranteed by the Central Government
Contract cover
The standard policy provides cover only for the post- shipment stage i.e.; from the
date of shipment. Cover for pre-shipment losses which may be sustained by an
exporter due to impossibility of exporting goods already manufactured or purchased
for the reasons like ban on export of the item, restrictions on import of the item into
the buyer’s country or war, civil war, etc. are not covered under the policy because the
risk is very low in respect of raw materials, primary products, consumer goods or
consumer durables which can easily be resold. Where, however, the export involves
an item which is manufactured to the non-standard specifications of a buyer, cover
can be provided for the pre-shipment risks as well as the post-shipment risks by
means of an Endorsement to the Standard Policy.
Shipments made on credit exceeding 180 days are covered
The policy is meant to provide cover for shipments involving a credit period not
exceeding 180 days. In exceptional cases, however, cover may be granted for
shipments with longer credit period, provided that such longer credit periods are
justifiable for the export items concerned.
HOW THE RISKS ARE COVERED
Maximum Liability

The exporter has to get a credit limit approved from ECGC in respect of each foreign
buyer to whom he would like to make shipments on DP/DA/OD terms of payment. In
addition, if shipments are made to a buyer in some of the countries classified by
ECGC as restricted cover countries (see below for details), Specific Approval of
ECGC should be obtained for such shipment. Further, the exporter has to declare to
ECGC all his shipments and pay premium as explained later. As the Standard Policy
is intended to cover all the shipments that may be made by an exporter in a period of
24 months ahead, the ECGC will fix its Maximum Liability under each Policy. The
Maximum Liability for the shipments made by an exporter in each of the policy years.
To obtain the policy with maximum liability, exporters are advised to estimates the
maximum outstanding payments due from overseas buyers at any one time during the
policy period and convey it to ECGC. The
Credit limits on buyers
Commercial risks are covered under the policy only if a credit limit is approved by
ECGC on each buyer to whom shipments are made on credit terms. The exporter has,
therefore, to apply for a suitable credit limit on each buyer. On the basis of its own
judgement of the creditworthiness of the buyer, as ascertained from credit reports
obtained from banks and specialised agencies abroad, ECGC will approve the credit
limit which is the limit upto which it will pay claim on account of losses arising from
commercial risks on account of that buyer. The credit limit is a revolving limit and
once approved, it will hold good for all shipments to the buyer as long as there is no
gap of more than 12 months between two shipments. Credit limit is a limit on ECGC's
exposure on the buyer for commercial risks and not a limit on the value of shipments
that may be made to him. In case of losses due to political risks, ECGC's exposure is
not restricted by the credit limit. Premium has, therefore, to be paid on the full value
of each shipment even where the value of the shipment or the total value of the bills
outstanding for payment is in excess of the credit limit.
As the credit limit is indicative of the safe limit of credit that can be extended to the
buyer, the exporters are advised to see that the total value of the bills outstanding with
the buyer at any one time is not out of proportion to the credit limit. In cases where
the credit limit that ECGC is prepared to grant is far lower than the value of
outstanding bills, exporters may discuss the problem with ECGC officials.
Credit limits need not be obtained if a shipment is made on D.P. or C.A.D. terms and
if the value of the shipment does not exceed Rs. 10, 00,000. Political as well as

commercial risks will stand automatically covered for such shipments, the only
qualification been the claims will not be paid on more than two buyers during the
policy under this provision.
Charges for credit limit sanctioned
ECGC spends a considerable amount of money for obtaining reports on overseas
buyers from banks and credit information agencies abroad in order to assess their
credit standing and approves credit limits based on such assessment. ECGC charges a
status enquiry fee of Rs.500 for each credit limit application. An exporter need not
pay status enquiry fee for credit limits upto Rs.5 lac, if he furnishes a bank report not
older than 6 months on the buyer.
Status Enquiry Charges
In order to access the credit standing, ECGC obtain reports on overseas buyers from
banks and credit information agencies abroad and spends considerable amount for
obtaining such reports. The credit limits on buyers are based on such assessment.
ECGC charges a nominal fee for each credit limit application. If an exporter submits a
bank report not older than 6 months on the buyer, he need not pay any status enquiry
fee for credit limits up to Rs. 5, 00,000.
In case the limit is required urgently, exporters may request ECGC to obtain fax
report on the buyer and pay towards fax expenses. Alternatively exporter may obtain
cable report through his bank and furnish the same in original to ECGC for a quick
decision.
Restricted cover countries
For a large majority of countries, the Corporation places no limit for covering political
risks. Such countries are referred to as 'open cover' countries. More than 85% of the
countries in the world, which account for over 99% of the country's exports, are open
cover countries. However, in the case of certain countries where the political risks are
very high, cover is granted on a restricted basis. In respect of a majority of such
countries, revolving limits normally valid for one year are issued in place of credit
limits. The procedure for sanction of revolving limits is the same as for credit limits.
In respect of the few remaining countries under restricted cover, which are high risk
countries, specific approvals are given on the merits of each case. The period of
validity of the specific approval is six months.
Percentage of cover

ECGC normally pays 90% of the losses, whether it arises due to commercial risks or
political risks. The remaining 10% has to be borne by the exporter himself. However,
ECGC reserves the right to offer a lower percentage of cover in certain cases.
Premium an exporter has to pay
Premium payable will be determined on the basis of projected exports on an annual
basis subject to a minimum premium of Rs. 10,000 for the policy period. Cash
discount can be availed by the exporters paying premium upfront under the policies
(on quarterly / annually basis as the case may be under relevant policy @ 1% and 5%
respectively). Additional premium will have to be paid on the shipments declared by
the exporter after the minimum premium gets fully adjusted. No part of the minimum
premium will be refunded to the exporter if the premium payable on the actual
shipments falls below the amount of minimum premium.
Declaration of shipments and payment of additional premium
On or before the 15th of every month the policyholder is required to declare to ECGC
in a prescribed form, all the shipments made by him in the preceding calendar month.
If no shipment is made in a month, a NIL declaration should be sent. The premium is
required to be calculated by the exporter on the basis of schedule of premium given
by the ECGC along with the policy. The premium rates vary according to country
classification and the length of credit.
Premium rates
In order to facilitate the exporter’s, if there is no claim paid to the exporters during the
earlier policy period of 2 policy year , at the time of renewal , ‘no claims bonus
rates’ of 10% shall be offered to them. The maximum bonus rate offered to them is
50%.
Reduction allowed in the premium rates
If no claim is made on ECGC during a policy period of one year, a no-claim bonus of
5% is granted in the premium rates at the time of renewal of the policy. No claim
bonus can be accumulated for every policy period till a maximum bonus of 50% is
reached.
Exporter liable to pay premium
In respect of shipments to buyers on whom ECGC has refused credit limits, the
exporter will have the option of either paying premium for only political risks or not
paying any premium at all. If the full amount of credit limit asked for by an exporter
on a buyer is not sanctioned by ECGC, the exporter will have the option of paying

comprehensive premium on all shipments to the buyer (with the cover for commercial
risks restricted to the credit limit sanctioned, but cover for political risk to the full
extent) or paying premium for political risks only on all shipments or not paying any
premium for the shipments to that buyer under the Standard Policy.
Non-payment of the bill
In the event of non-payment of any bill by the foreign buyer by the due date, the
policyholder is required to take prompt and effective steps to prevent or minimize
loss. A monthly declaration of all bills which remain unpaid for more than 30 days
should be submitted to ECGC in the prescribed form indicating action taken in each
case. Prior approval of ECGC is required for granting extension of time for payment,
converting bill from DP to DA terms or resale of unaccepted goods at a lower price (if
the loss exceeds a certain limit).
Extending credit period or changing the tenor of the bills
It may sometimes become necessary for an exporter to extend the credit period of a
DA bill or to convert a DP bill into a DA bill in circumstances in which the buyer is
unable to meet the payment obligation as per the original tenor of the bill. Whenever a
policyholder wishes to grant such extensions or conversions for good reasons, he
should get the prior approval of ECGC and pay the necessary additional premium.
Premium rates and payment of premium
The ECGC has refused to approve credit limits and where cover has been provided at
the request of the exporter on shipments to associates and shipments made against
Irrevocable Letter of Credit.
In cases where an exporter obtains cover for shipments made on consignment basis
comprehensive cover for shipments made against Irrevocable Letter of Credit or
contracts cover (only in exceptional cases) or cover for shipments with a credit period
exceeding 180 days premium rates will be quoted while granting such cover.
Premium at comprehensive rates will be payable where additional cover is provided
for shipments made to government buyers.
Approval is taken for resale of unaccepted goods
The policyholder is obliged to take immediate and effective action to minimize the
possible loss if and when a buyer does not take delivery of the goods. If he wishes to
resell the goods to an alternate buyer or bring back the goods to India, approval of
ECGC is to be obtained only if the loss on account of resale or reshipment exceeds
25% of the gross invoice value. Notice of resale should be given to the original buyer

so that it would be possible to take legal action against him subsequently, if
considered necessary, for recovery of the loss.
Eligible for receiving payment of a claim under the Policy
A claim will arise when any of the risks insured under the policy materializes. If any
overseas buyer goes insolvent, the exporter becomes eligible for a claim one month
after his loss is admitted to rank against the insolvent's estate or after four months
from the due date, whichever is earlier. In case of protracted default the claim is
payable after four months from the due date. Claims in respect of additional handling,
transport or insurance charges incurred by the exporter because of interruption or
diversion of voyage outside India are payable after proof of loss is furnished. In all
other cases claim is payable after four months from the date of the event causing loss.
However, in case of exports to countries where long transfer delays are experienced,
ECGC may extend the waiting period and claims for such shipments are payable after
the expiry of such extended period.
Debt recovery
Payment of claims by the ECGC does not relieve an exporter of his responsibility for
taking recovery action and realizing whatever amount can be recovered. The exporter
should, therefore, consult ECGC and take prompt and effective steps for recovery of
the debts. For its part, ECGC will help the exporter by providing the name of a
reliable lawyer and/or debt collecting agency and by enlisting the help of India's
commercial representative in the buyer's country.
It is also to be noted that receipt of a claim from ECGC does not relieve an exporter
from obligations to the Exchange Control Authority for recovering the amount from
the overseas buyers.
Sharing recovery with ECGC
All amounts recovered, net of recovery expenses should be shared with ECGC in the
ratio in which the loss was originally shared. Receipt of a claim from ECGC does not
relieve an exporter from obligations to the Exchange Control Authority for recovering
the amount from the overseas buyers.
How to obtain a policy
The exporter should fill in a Proposal Form, which can be downloaded from here or
obtained from any of the ECGC offices and send it to the nearest ECGC office. He
should also confirm his acceptance of the premium rates, a schedule of which will be
given to him along with the Proposal Form and remit applicable premium.

Small Exporters Policy
The Small Exporter's Policy is basically the Standard Policy,
incorporating certain improvements in terms of cover, in order to
encourage small exporters to obtain and operate the policy. It is
issued to exporters whose anticipated export turnover for the
period of one year does not exceed Rs.50 lacs.
The small exporter the policy is basically the standard policy the
main feature of which are as follows:-
Period of Policy: Small Exporter's Policy is issued for a period of 12 months, as
against 24 months in the case of Standard Policy.
Minimum premium: Premium payable will be determined on the basis of projected
exports on an annual basis subject to a minimum premium of Rs. 2000/- for the policy
period. No claim bonus in the premium rate is granted every year at the rate of 5% (as
against once in two years for Standard Policy at the rate of 10%).
Declaration of shipments: Shipments need to be declared quarterly (instead of
monthly as in the case of Standard Policy).
Declaration of overdue payments: Small exporters are required to submit monthly
declarations of all payments remaining overdue by more than 60 days from the due
date, as against 30 days in the case of exporters holding the Standard Policy.
Percentage of cover: For shipments covered under the Small Exporter's Policy
ECGC will pay claims to the extent of 95% where the loss is due to commercial risks
and 100% if the loss is caused by any of the political risks (Under the Standard
Policy, the extent of cover is 90% for both commercial and political risks).
Waiting period for claims: The normal waiting period of 4 months under the
Standard Policy has been halved in the case of claims arising under the Small
Exporter's Policy.

Change in terms of payment of extension in credit period: In order to enable small
exporters to deal with their buyers in a flexible manner, the following facilities are
allowed:
• A small exporter may, without prior approval of ECGC convert a D/P bill into
DA bill, provided that he has already obtained suitable credit limit on the
buyer on D/A terms.
• Where the value of this bill is not more than Rs.3 lacs, conversion of D/P bill
into D/A bill is permitted even if credit limit on the buyer has been obtained
on D/P terms only, but only one claim can be considered during the policy
period on account of losses arising from such conversions.
A small exporter may, without the prior approval of ECGC extend the due date of
payment of a D/A bill provided that a credit limit on the buyer on D/A terms is in
force at the time of such extension.
Resale of unaccepted goods: If, upon non-acceptance of goods by a buyer, the
exporter sells the goods to an alternate buyer without obtaining prior approval of
ECGC even when the loss exceeds 25% of the gross invoice value, ECGC may
consider payment of claims upto an amount considered reasonable, provided that
ECGC is satisfied that the exporter did his best under the circumstances to minimize
the loss. In all other respects, the Small Exporter's Policy has the same features as the
Standard Policy.
Benefits:-
This policy pays in the event of loss to the policyholder on account of:
Commercial Risks:
• Insolvency of the buyer.
• Failure of the buyer to make the payment due within a specified period,
normally 2 months from the due date.
• Buyer's failure to accept the goods, subject to certain conditions.
Political Risks
• Imposition of restriction by the Government of the buyer's country or any
Government action which may block or delay the transfer of payment made by
the buyer.
• War, Civil War, revolution or civil disturbances in the buyer's country.
• New Import restrictions or cancellation of a valid import license.

• Any other cause of loss occurring outside India, not normally insured by
Premium
• The premium rates depend on the country to which exports are made and the
period of repayment.
• At least 20% of the total amount of premium should be paid in advance. The
balance amount of premium may be paid on a quarterly basis in proportion to
the amount of credit disbursed.
Requirements
• Completely filled in Proposal Form along with minimum premium of
Rs.2,000 is to be submitted to the ECGC.
• Exporter should also confirm his acceptance of the premium rates, a schedule
of which will be given along with the Proposal Form.
Recommendations
• Policy covers most of the risks faced by small exporters and provides the
confidence to exporters to expand the business aggressively.
• Further it has been specifically designed keeping in view their requirements.
Hence it is recommended.
Exclusions
• Commercial disputes including quality disputes raised by the buyer, unless the
exporter obtains a decree from a competent court of law in the buyer's country
in his favor.
• Causes inherent in the nature of the goods.
• Buyer's failure to obtain necessary import or exchange authorization from
authorities in his country.
• Insolvency or default of any agent of the exporter or of the collecting bank.
• Exchange rate fluctuation.
• Failure or negligence on the part of the exporter to fulfill the terms of the
export contract.

Specific Shipment Policy - Short Term (SSP-ST)
Specific Shipment Policies - Short Term (SSP-ST) provide cover
to Indian exporters against commercial and political risks involved
in export of goods on short-term credit not exceeding 180 days.
Exporters can take cover under these policies for either a shipment
or a few shipments to a buyer under a contract. These policies can
be availed of by
• Exporters who do not hold SCR Policy and
• By exporters having SCR Policy, in respect of shipments permitted to be
excluded from the preview of the SCR Policy.
Specific policy for the contracts may take any of the following forms:-
• Specific Shipments (commercial and political risks) Policy - short-term.
• Specific Shipments (political risks) Policy - short-term.
• Specific Shipments (insolvency & default of L/C opening bank and political
risks) Policy - short-term.
Risks covered under SSP (ST)
Commercial risks: [For SSP-ST policies of the type Specific Shipments
commercial and political risks]
• Insolvency of the buyer.
• Failure of the buyer to make the payment due within a specified period,
normally four months from the due date.
• Buyer's failure to accept the goods (subject to certain conditions).
Political risks: [For all the SSP-ST policies]
• Imposition of restrictions by the Government of the buyer's country or any
the buyer;

• War, civil war, revolution or civil disturbances in the buyer's country; New
import restrictions or cancellation of a valid import license;
• Interruption of voyage outside India resulting in payment of additional freight
or insurance charges which cannot be recovered from the buyer.
• Any other cause of loss occurring outside India not normally insured by
Insolvency & default of LC opening bank [For SSP-ST policies of the type
insolvency & default of L/C opening bank and political risks].
• Insolvency of the L/C opening bank;
• Failure of the LC opening bank to make the payment due within a specified
period, normally four months, from the due date.
Risks not covered under SSP (ST)
in his favour;
• Causes inherent in the nature of goods;
• Insolvency or default of any agent of the exporter or of the collecting bank;
• Loss or damage to goods;
• Exchange rate fluctuation;
• Failure of the exporter to fulfill the terms of the export contract or negligence
on his part;
• Non-payment under a letter of credit due to any discrepancy pointed out by the
L/C opening bank.
Procedure to obtain SSP (ST)
The exporter has to submit a proposal in the prescribed form along with a copy of the
L/C or relevant contract. Different proposal forms are to be used for different types of
SSP-ST policies. Normally, the proposal has to be submitted before making the
shipment and the cover would be given only from the date of receipt of proposal.
However, in case the exporter approaches ECGC for covering a shipment already

made, issue of policy can be considered provided not more than 15 days have elapsed
between the date of shipment and the date of receipt of proposal.
Shipments covered under SSP (ST)
The exporter can opt to cover one or more shipments under a particular contract. He
can also choose to cover shipments made during a given period within the validity of
the contract. For example if an exporter has received a contract for supply of goods
within a period of say, one year, he can choose to cover a batch of shipments to be
made within a period, say 90 days or 180 days. He may opt to cover further shipments
under another specific policy at a later date.
Period of validity
The policy would be valid for shipment(s) made from the date of receipt of proposal
up to the last date allowed under the relevant contract for shipment. If the exporter has
chosen to cover the shipments to be made during a particular period, the policy would
be issued for that period. In case the policy is issued to cover a shipment already made
before the proposal is submitted, the policy would be valid only for that shipment. If
the proposal is to cover the shipment already made under a contract and to cover
further shipments to be made under the same contract, the policy shall be issued for
the period from the date of the shipment already made up to the period of contract or
the period as desired by the exporter, whichever is earlier.
Percentage covered
The percentage of cover normally available under the policy would be 80% of the
gross invoice value of the shipments covered, in respect of countries in open cover.
However, policy could also be issued with a lower percentage of cover with
proportionate reduction in the amount of premium payable and the amount of
maximum liability. The percentage of cover in respect of countries under restricted
cover category would depend upon the underwriting policy applicable for the country
at the relevant point of time.
Maximum liability
The maximum liability (ML) which is the limit up to which ECGC would accept
liability under the policy is arrived at by applying the agreed percentage of cover to
the gross invoice value of the shipments covered under the policy. Enhancement in
ML, if necessitated by amendment to the original contract, can be considered subject
to payment of additional premium by an endorsement to the policy issued.

Processing fee and premium payable
Along with the proposal the exporter is required to pay a processing fee of Rs.1000/-
which is non-refundable. Premium will be charged on the gross invoice value in rupee
terms converted at the rate prevailing on the date of submission of the proposal.
Where the exporter has chosen to cover shipments to be made during a particular
period premium shall be charged for the shipments scheduled to be made during the
chosen period.
Premium rates
The rates of premium vary depending upon the terms of payment, the classification of
the buyer's country and whether a shipment is covered against comprehensive risks or
only political risk. To find out the premium, please contact your nearest ECGC
Branch.
Withdrawal
In case of any adverse experience / report on the buyer or his country ECGC or the
exporter can withdraw the cover. For the shipments made prior to such withdrawal,
cover would be available.
Seek extension of the validity period
If the exporter fails to make the shipment within the validity of the contract, he can
seek extension of the period of validity of the policy after getting the contract duly
extended.
Obligations on the part of the exporter holding SSP (ST)
Submission of statement of shipments made: On or before 15th of every month the
exporter is required to submit a statement of shipments made during the previous
month under the contract, which is covered under the policy. Submit along with the
proposal form.
Submission of statement overdue: of On or before 15th of every month the exporter
is required to submit a statement of payments against the shipments covered under the
contract which have remained overdue for more than thirty days from the due date;
Intimation of event affecting the risk: If the exporter comes to know about any
event likely to affect the risk the same has to be intimated to ECGC immediately and
in any case by not later than 30 days;
Action for minimizing loss: Immediate steps are to be taken in the event of non-
receipt of payment for any shipment. On learning of non-payment of the shipment, for
which the policy is obtained, exporter is required to take suitable action to prevent /

minimize the loss, including such action as may be suggested by ECGC. Action to
prevent / minimize loss will depend on the facts and circumstances of each case.
Given below is the course of action that may have to be taken immediately.
• Persuading the buyer to make the payment while, at the same time,
maintaining recourse against him by getting the bill noted and protested for
non-payment;
• Not agreeing to give any extension of the due date of the bill unless there are
good reasons for doing so. Prior approval of the Corporation should be taken
for granting such extension. In case any condition is stipulated by ECGC
while granting extension, it should be ensured that the conditions
• If resale is not possible, to bring the goods back to India, with the prior
approval of ECGC (if the loss is up to 25% of the gross invoice value such
permission is not required).
• Desisting from making any further shipment to the buyer until he has made the
payment for the bill in default.
Ascertained loss
Normally loss shall be ascertained four months after the due date. In case of
insolvency risk, loss shall be ascertained one month from the date of admission of
debt by the receiver or four months from the due date whichever is earlier. Where the
debt is yet to be admitted by the receiver an undertaking from the exporter has to be
obtained stating that he has done nothing or not omitted to do anything that will make
his claim in the insolvent estate in-admissible. Otherwise dispose of and in any case
not earlier than four months from the due date of the payment.
Filling a claim
An exporter can file his claim under the policy any time after the loss is ascertained
but within one year from the due date of payment for the shipment under claim.
Recovery on payment of claim
Upon payment of a claim the exporter shall continue to take steps for recovering the
dues from the buyer including action, if any, stipulated by ECGC. Any amount spent
on recovering the dues shall have a first charge on recovery. Any amount recovered
net of recovery expenses shall be shared between ECGC and the exporter in the same
ratio in which the loss is shared.
Closing a SSP (ST)

At the time of issue of SSP-ST Policy, a "Payment Advice Slip" ('PAS') is attached
requesting the exporter to advise ECGC about the payment when it is received from
the buyer or the L/C opening bank. If the exporter has sent the statement of shipments
made but fails to send the 'PAS' and if no statement of overdue is received from the
exporter within the prescribed period, action would be initiated to close the policy
presuming that the payment has been received from the buyer.
Export (Specific Buyers) Policy
Buyer wise Policies - Short Term (BP-ST) provide cover to
Indian exporters against commercial and political risks involved
in export of goods on short-term credit to a particular buyer. All
shipments to the buyer in respect of whom the policy is issued
will have to be covered (with a provision to permit exclusion of
shipments under LC). For every buyer, a separate policy has to
be obtained. The policy would be valid for a period of one year.
These policies can be availed of by
• exporters who do not hold SCR Policy and
• by exporters having SCR Policy,
• In case all the shipments to the buyer in question have been permitted to be
excluded from the purview of the SCR Policy.
Types of BP (ST)
• Buyer wise (commercial and political risks) Policy - short-term
• Buyer wise (political risks) Policy - short-term.
• Buyer wise (insolvency & default of L/C opening bank and political risks)
Policy – short-term.
Risks covered under BP (ST)
• Commercial risks Insolvency of the buyer Failure of the buyer to make the
payment due within a specified period, normally four months from the due
date. Buyer’s failure to accept the goods (subject to certain conditions).
• Political risks: (For all the BP-ST policies) Imposition of restrictions by the
Government of the buyer's country or any Government action which may
block or delay the transfer of payment made by the buyer; War, civil war,

revolution or civil disturbances in the buyer's country; New import restrictions
or cancellation of a valid import license; Insolvency & default of LC
opening bank [For BP-ST policies of the Buyer wise (insolvency & default
of L/C opening bank and political risks) Policy - short-term.] Insolvency of
the L/C opening bank; Failure of the LC opening bank to make the payment
due within a specified period, normally four months from the due date;
Risks not covered
in his favor;
• Causes inherent in the nature of goods;
• Loss or damage to goods;
• Exchange rate fluctuation
Procedure
The exporter has to submit a proposal in the prescribed form. The proposal has to be
submitted before making the shipments and the cover would be given only from the
date of receipt of proposal. (In case the exporter desires to cover any shipment made
prior to the submission of proposal, the same can be covered under Specific Shipment
Policy, subject to its terms and conditions).
Percentage to be covered
The percentage of cover normally available under the policy would be 80% of the
gross value of the shipments covered. However, policy could also be issued with a
lower percentage of cover with proportionate reduction in the amount of premium
payable.
Maximum Liability
The Maximum Liability (ML) is the limit up to which ECGC would accept liability
under the policy.
Credit assessment
A CD fee of Rs. 1000/- shall be payable for proposals for buyer wise policy in respect
of each buyer/bank. A credit enhancement fee of Rs. 500/- is payable in case an

enhancement in the limit is desired due to increased volume of business. In case of
proposals for covering political risks only, no credit assessment fee will be charged.
Applicable premium rates
The rates of premium vary depending upon the terms of payment, the classification of
the buyer's country and whether a shipment is covered against comprehensive risks,
bank risks or only political risk. To find out the premium rate for a particular
transaction, go to the 'Premium Calculator' by clicking here. There is bonus claims are
available
Premium payable
Premium will be worked out on the projection given in the proposal in the proposal
form and taking into account the applicable premium rates. The premium for the first
quarter has to be paid within 15 days from the date the premium is called for.
Premium for the subsequent quarters has to be remitted based on the projected
turnover and also after adjusting any shortfall or excess in the premium paid for the
earlier quarter, within 15 days from the beginning of the respective quarter.
Renew the policy
Where the exporter does not seek renewal of cover in respect of any buyer on whom
he had taken cover earlier, the following course of action would be taken.
• If the actual premium for the quarter is more than the premium collected on
the projected turnover for the quarter, the exporter would be advised to pay the
difference. In case the exporter fails to pay the premium within 15 days from
the date the premium is called for, cover for any loss in respect of the policy
would be limited to the turnover in respect of which premium has been paid.
• If the actual premium is less than the premium collected on the projected
turnover the excess would be refunded.
Withdrawal
ECGC can withdraw the cover any time by informing the exporter in writing its
intention to do so. The cover shall stand terminated from the date of such withdrawal.
Shipments made to the buyer after that date will not stand covered under the buyer-
wise policy.
Obligations on the part of the exporter holding BP (ST)
• Submission of statement of shipments made: Exporter has to submit, within
15 days after the end of the quarter, a statement of shipments made during the

quarter in respect of the buyer/bank covered under the Buyer wise policy. It is
also necessary to indicate in the statement the projected turnover for the next
quarter in respect of the buyer/bank covered under the policy.
• Submission of statement of overdue: On or before 15th of every month is
required to a statement of payments against the shipments under the contract
which have remained overdue for more than thirty days from the due date;
• Intimation of event affecting the risk: If the exporter comes to know any
event likely to affect the risk the same has to be intimated to ECGC and in any
case by not later than 30 days;
• Action for minimizing loss: Immediate steps are to be taken in the event of
non-payment for any shipment. On learning of non-payment for the shipment,
for which the policy is obtained, exporter is required to take action to prevent /
minimize the loss, including such action as may be intimated by ECGC.
Given below is the course of action that may to be taken immediately:
 Persuading the buyer to make the payment while, at the same time,
maintaining recourse against him by getting the bill noted and protested for
non-payment;
 If resale is not possible, bringing the goods back to India , with the prior
approval of ECGC (if the loss is up to 25% of the gross invoice value such
permission is not required).
 Desisting from making any further shipment to the buyer until he has made the
payment for the bill in default.
Ascertained loss
Normally loss shall be ascertained four months after the due date. In case of
insolvency risk, loss shall be ascertained one month from the date of admission debt
by the receiver or four months from the due date whichever is earlier. Where the debt
is yet to be admitted by the receiver an undertaking from the exporter has to be
obtained stating that he has done nothing or not omitted to anything that will make his
claim in the insolvent estate in-admissible.
Filling a claim
An exporter can file his claim under the policy any time after the loss is ascertained
but within one year from the due date of payment for the shipment claim.
Recovery on payment

Upon payment of a claim the exporter shall continue to take steps for recovering dues
from the buyer including action, if any, stipulated by the Corporation. Any amount
spent on recovering the dues shall have a first charge on recovery. The amount
recovered net of recovery expenses shall be shared between ECGC and the exporter in
the same ratio in which the loss is shared.
Buyer Exposure Policies
Presently, in the policies offered to exporters premium is charged on the export
turnover, though the Corporation’s exposure on each buyer is
controlled through a system of approval of credit limits on the
buyer for covering commercial risks. While this suits the small
and medium exporters, many large exporters having large
number of shipments have been complaining about the volume of
returns to be filed under the policy necessitating the deployment
of their resources for this purpose and also resulting in possible unintentional
omissions or commissions in such reporting, which have an impact on the settlement
of claims. There has been a demand for simplification of the procedures as well as for
rationalization of the premium structure. Considering the requirements of such
exporters, the Corporation has decided to introduce policies on which premium would
be charged on the basis of the expected level of exposure. Two types of exposure
policies – one for covering the risks on a specified buyer and another for covering the
risks on all buyers- are offered.
Two types of Exposure policies are offered, viz,
• Exposure (Single Buyer) Policy – for covering the risks on a specified buyer&
• Exposure (Multi Buyer) Policy – for covering the risks on all buyers.
Exposure (Single Buyer) Policy covers
An exporter can choose to obtain exposure based cover on a selected buyer. The cover
would be against commercial and political risks attached to the buyer for both non-LC
and LC transactions. A separate Buyer Exposure Policy will be issued for each buyer
covering all the exports to be made to the buyer during a period of twelve months. If
the exporter has opted for commercial and political risks cover, failure of the LC
opening bank in respect of exports against LC will also be covered, for the banks with
World Rank (WR) up to 25,000 as per latest Banker’s almanac. For covering any

bank with ranking beyond that level, the exporter has to obtain specific approval from
the branch, which issued the policy prior to making the shipment. For covering the
political risks only, in respect of LC transactions or shipments to associates, Buyer
Exposure policy with endorsement restricting the cover to political risks only with
significantly less premium is offered.
Percentage of loss
The loss of coverage would be 90 percent for those who also hold our Standard
Policies and at 80 percent for others. If it is mutually agreed between the Corporation
and the policyholder, the Policy could provide for a higher share of loss to be retained
by the insured with proportionate reduction of premium.
The existing premium structure for SCR Policies is related to the shipments made and
not to the loss limits (credit limit / maximum liability) specified for a buyer. The
premium structure for an exposure-based policy is therefore quite different from that
for the SCR Policies.
Procedure for payment of premium
Exporters opting for this Policy would be offered the option to remit the premium
either on a quarterly installment basis or on an annual basis. Where the exporter opts
to pay premium on an annual basis, a discount of 5% would be given in the premium
payable. Premium for every quarter shall be payable in advance prior to the beginning
of the quarter. In case of any delay, the cover shall not be available in respect of
shipments made during the period from the beginning of the quarter up to the date of
remittance.
Premium once paid is treated as non-refundable. In case the Corporation withdraws
cover during the period of the policy due to any reason, the proportionate premium for
the balance period in months beyond the month in which the cover is withdrawn will
be refunded subject to retention of minimum premium equivalent to 25% of the total
premium.
Other procedural
• The policy would specify the loss limit up to which claim will be entertained
due to any of the risks covered under the policy in respect of shipments made
to the buyer during the policy period.

• The actual turnover in the prescribed format would be required at the time of
renewal of the policy.
• The exporter is required to obtain the prior approval of the Corporation for
extending the due date for any shipment, if the revised due date is beyond 180
days from the date of shipment.
• The non-receipt of payments is to be notified within 30 days from the due date
or extended due date of payment.
• The claim is required to be filed in the prescribed form with in one year from
the due date of payment.
• The exporter is required to submit the proposal form prescribed with the non-
refundable policy fee of Rs.1,000/-.
Need for Exposure (Multi – Buyer) Policy
Some exporters export to large number of buyers. The number of shipments made by
them is also quite high. They may not find it convenient to apply for buyer exposure
policy for all their buyers. It may also be difficult for them to declare their exports
shipment-wise under the Standard policies. In order to meet the needs of such
exporters, “Multi-buyers Exposure Policy” has been introduced.
Features of Exposure (Multi – Buyer) Policy
Exporters can take cover for an Aggregate Loss Limit (ALL) on all their buyers to
whom they propose to sell on credit terms in open cover countries. While accepting
the proposal, the Corporation would expect the ALL sought to be not less than 10% of
the past 12 month turnover applicable for the categories/countries for which cover is
sought.
• The policy would be issued for a period of one year.
• If the transaction is on LC terms, failure of the LC opening bank in respect of
exports against LC will also be covered, for banks with World Rank up to
25000 as per latest Banker’s Almanac.
• Cover in respect of exports to restricted cover countries would not be available
under this policy.
• Loss limit in respect of export to any individual buyer/bank will, however, be
restricted to 10% of the ALL.
• Premium at the rate of 275 paise per Rs.100/- is payable on the ALL fixed to
cover all shipments to be made during the Policy year.

• The risks covered, percentage of loss, payment of premium, declaration of
turnover, enhancement of ALL, overdue declaration, extension in due date,
claim etc will remain the same as Exposure (Single Buyer) Policy.
• The exporter has to apply in the prescribed proposal form along with the non-
refundable policy fee of Rs.5, 000/-.
Service Policy
Where Indian companies conclude contracts with foreign principals for
providing them with technical or professional services, payments due
under the contracts are open to risks similar to those under supply
contracts. In order to give a measure of protection to such exporters of
services, ECGC has introduced the Services
Types of Services Policy and Protection
Specific Services Contract (Comprehensive Risks) Policy;
Specific Services Contract (Political Risks) Policy;
Whole-turnover Services (Comprehensive Risks) Policy; and
Whole-turnover Services (Political Risks) Policy
Specific Services Policy, as its name indicates, is issued to cover a single specified
contract. It is issued to provide cover for contracts, which are large in value and
extend over a relatively long period. Whole-turnover services policies are appropriate
for exporters who provide services to a set of principals on a repetitive basis and
where the period of each contract is relatively short. Such policies are issued to cover
all services contracts that may be concluded by the exporter over a period of 24
months ahead.
The Corporation would expect that the terms of payment for the services are in line
with customary practices in international trade in these lines. Contracts should
normally provide for an adequate advance payment and the balance should be payable
periodically based on the progress of work. The payments should be backed by
satisfactory security in the form of Letters of Credit or bank guarantees.
Services policies are designed to cover contracts under which only services are to be
rendered. Contracts under which the value of services to be rendered forms only a

small part of a contract involving supply of machinery or equipment will be covered
under an appropriate specific policy for supply contracts.
Software Project Policy
The Services Policies of the Corporation which have been in
existence for some time were offered to provide protection of
exporters of services including software and related services.
However it was found that the general services policy does not meet
with the exact requirements of software exporters. It was therefore
decided to introduce a new credit insurance cover to meet the needs
of the software exporters, namely, software projects policy, where the payments will
be received in foreign exchange. The general services policies will continue to be
offered for the export of services other than software and related services.
Cover under the Software Project Policy
The following software services will be eligible for cover under the Software Projects
Policy: Software project services, either on one time/turnkey basis or
progressive/milestone basis, involving
• Development of software off-shore (i.e. at the exporters location in India) to
be delivered and implemented in the buyer’s (client) location; or
• Development of software on-site of the client and supply and implementation;
or
• Both off-shore and on-site development.
Features of Software Projects Policy
• Instead of monthly declaration, exporter would be required to submit a
progress report indicating the level of completion, payment sought and
payment received and deviations in these areas.
• The exporter has to specify in advance the manner in which the work in
progress would be estimated (namely, the reports that would be available on
the volume of work done and the rate to be applied on the defined unit to

arrive at the work done - it could be a document giving the man hours spent
and rate per man hour or it could be a simple number of days worked and rate
per day).
• Liability of the Corporation would be only for the work reported in the
progress report.
• The Corporation will have the right to examine the books of accounts and
other documents of the exporter either on its own or through an authorized
agency prior to admission of claim. Certification by banks may be dispensed
with in cases where it is felt that it is not possible.
• The contract should provide for a clear acceptance mechanism in respect of
services rendered and, if possible, a procedure for arbitration. It should also
provide for rectification of mistakes – errors and also omissions. The
Corporation would not cover any loss due to errors or omissions.
• Loss coverage will be restricted to 80% as there is no salvage possibility.
• Apart from stipulating the loss limit on the buyer, the policy document would
also specify the limit up to which the losses are covered under other risks.
Risks covered under the Software Projects Policy
The risks covered under the Policy would be similar to the risks covered under
standard policies in character but the wordings are slightly amended to be in line with
the special features of the software exports. The risks covered would be as under:
Commercial risks:
• Default – the failure of the customer to pay to the exporter within four months
after the due date of payment the contract price of services rendered to and
accepted by the customer: or
• Insolvency of the customer: or
• Wrongful repudiation of the contract by the customer after the exporter has
incurred expenses for commencement of services.
Political risks:
• The operation of a law or of an order, decree or regulation having the force of
law, which, in circumstances outside the control of the Exporter and/or of the
buyer prevents, restricts or controls the transfer of payment from the
customer’s country to India: or
• The occurrence of war between the customers’ country and India: or

• The occurrence of war, hostilities, civil war, rebellion, revolution, insurrection
or other disturbances in the customer’s country; or
• The imposition in India or in the customer’s country after the date of contract,
of any law or of an order, decree or regulation having the force of law, which
in circumstances outside the control of the Exporter and/ or the customer,
prevents performance of the contract; or
• Any of the following causes of loss not being within the control of the
exporter and/ or the customer which arises from an event occurring outside
India;
• Refusal of visa for employees of exporter who are required to be in the place
of the project to enable the exporter to execute contractual obligations for
reasons not attributable to the exporter or customer.
• Unjustified restraining of personnel of the exporter by authorities in
customer’s country.
• Increase in any tax or introduction of a new tax payable by the exporter in the
customer’s country, which is not recoverable from the customer.
• Imposition by a competent court of law or the government, a rule or law or an
order which results in losses / additional costs due to infringement of
Intellectual Property Rights (IPR) of a process or software which was either in
the domain of free software or the IPR was not established on the date of
contract.
• Variation in exchange rates between Indian rupee and foreign currency
concerned beyond three percentages over the stipulated level resulting in loss
to the exporter for contracts involving service beyond 360 days.
• The losses due to the risks described under (e) above would be covered by the
Corporation subject to a maximum of 25% of the value of export.
Policy supply of software products and packages will be covered under
Pure supply of software products and packages could be covered under the standard
and specific policies offered for commodities.

IT-enabled Policy Services (Specific Customer)
IT-enabled Services (Specific Customer) Policy is issued to
cover the following commercial and political risks involved in
rendering IT-enabled services to a particular customer:
Commercial risks:
• Insolvency of the customer.
• Failure of the customer to make the payment due within a
specified period, normally four months from the due date.
• Buyer's failure to accept the services rendered (subject to certain conditions).
Bank risks:
• Bankruptcy of L/c opening bank.
• Failure of L/c opening bank to make the payment due within a specified
period, normally within four months from the due date (Non-payment due to
discrepancies in the document will not be covered).
Political risks:
• Imposition of restrictions by the Government of the customer’s country or any
the customer;
• War, civil war, revolution or civil disturbances in the customer’s country;
• New import restrictions or cancellation of a valid import license by authorities
in the customer’s country;
• Cancellation by the Govt. of India a legally valid and binding contract
between the exporter and the customer.
Types of ITES contracts covered
ITES policy will provide cover in respect of contracts for rendering service during a
defined period with billing on the basis of service rendered during a period say, a

week, a month or a quarter, where the payments due for the services rendered will be
received in foreign exchange.
Features of IT- enabled services contract that will be eligible for cover under IT-
enabled services policy
Some of the important features of the IT enabled services contracts are as follows:-
• The contract would be for providing certain service during a defined period. It
is not for completion of a particular work or job.
• Billing would be for the service rendered during a pre-determined interval – a
week, a fortnight or a month. The contract should stipulate the manner for
assessment of service rendered, periodicity of billing, manner of acceptance
and due date for the payment of bills.
• Where there is a non-payment problem, there can be certain services invoiced
and accepted but not paid, certain services invoiced but not accepted yet and
certain services rendered but yet to be invoiced.
• There can be cases where there is no physical documentation. The entire
process may be carried out through electronic media including billing.
Consequently, there may not be any bank, which handles the documents.
• The contract could also provide for detection of mistakes or errors while
rendering the service and the procedure for correction. Penalties or reduction
in payment for errors and omissions are also possible.
Features of the IT-enabled services policy
Some of the important features of these policies would be as follows:
• Monthly declaration indicating the services rendered, invoices raised and
invoices paid will have to be submitted by the exporters in the prescribed
form. No separate overdue report will be necessary. In case of non-payment,
• Liability of the Corporation would be for the services rendered and reported in
the monthly declaration.
• The Corporation will have the right to examine the books of accounts and
other documents of the exporter either on its own or through an authorized
agency prior to admission of claim. Certification by banks may be dispensed
with in cases where it is felt that it is not possible.
• The contract should provide for a clear acceptance mechanism in respect of
services rendered and, if possible, a procedure for arbitration. It should also

provide for rectification of mistakes – errors and also omissions. The
Corporation would not cover any loss due to errors or omissions.
• Cover will be given only up to 80%.
The policy will be offered for contracts, which contain standard terms and conditions
as per the norms and practices of the IT-enabled Services export industry.
Exporters opting for this Policy would be offered the option to remit the premium
either on a quarterly installment basis or on an annual basis. Where the exporter opts
to pay premium on an annual basis, a discount of 5% would be given in the premium
payable. Premium for every quarter shall be payable in advance prior to the beginning
of the quarter. In case of any delay, the cover shall not be available in respect of
shipments made during the period from the beginning of the quarter up to the date of
remittance. Premium once paid is treated as non-refundable. In case the Corporation
withdraws cover during the period of the policy due to any reason, the proportionate
premium for the balance period in months beyond the month in which the cover is
withdrawn will be refunded subject to retention of minimum premium equivalent to
25% of the total premium.
Other procedural
• The policy would specify the loss limit up to which claim will be entertained
due to any of the risks covered under the policy in respect of services rendered
to the customer during the policy period.
• If the exporter desires enhancement of the customer loss limit and if the
Corporation is satisfied with the reasons, the same may be agreed to with
proportionate increase in the premium payable for the rest of the policy period
from the month following the request for change subject to a minimum of
three months.
• Similarly, the Corporation will have the discretion to reduce the loss limit on
an insured customer with corresponding reduction in the premium amount
payable for the rest of the policy period from the following month.
• The actual turnover in the prescribed format would be required at the time of
renewal of the policy.

• The exporter is required to obtain the prior approval of the Corporation for
extending the due date for any service rendered, if the revised due date is
beyond 180 days from the date of rendering of such service.
• The claim is required to be filed in the prescribed form with in one year from
the due date of payment.
• The exporter is required to submit the proposal form prescribed with the non-
refundable policy fee of Rs.1, 000/-.
Construction Works Policy
Construction Works Policy is designed to provide cover to an Indian contractor who
executes a civil construction job abroad.
The distinguishing features of a construction contract are that
(a) The contractor keeps raising bills periodically throughout the
contract period for the value of work done between one billing
period and another;
(b) To be eligible for payment, the bills have to be certified by a
consultant or supervisor engaged by the employer for the purpose
and
(c) that, unlike bills of exchange raised by suppliers of goods, The bills raised by the
contractor do not represent conclusive evidence of debt but are subject to payment in
terms of the contract which may provide, among other things, for penalties or
adjustments on various counts.
The scope for disputes is very large. Besides, the contract value itself may only be an
estimate of the work to be done, since the contract may provide for cost escalation,
variation contracts, additional contracts, etc. It is, therefore, important that the
contractor ensures that the contract is well drafted to provide clarity of the obligations
of the two parties and for resolution of disputes that may arise in the course of
execution of the contract. Contractors are well advised to use the Standard Conditions
of Contract (International) prepared by the Federation International Des Ingenieurs
Conseils (FIDIC) jointly with the Federation International du Batiment et des Travaux
Publics (FIBTP).
Risks covered by Construction Works Policy

The Construction Works Policy of ECGC is designed to protect the Contractor from
85% of the losses that may be sustained by him due to the following risks:
• Insolvency of the employer (when he is a non-Government entity);
• Failure of the employer to pay the amounts that become payable to the
contractor in terms of the contract, including any amount payable under an
arbitration award;
• Restrictions on transfer of payments from the employer's country to India after
the employer has made the payments in local currency;
• Failure of the contractor to receive any sum due and payable under the
contract by reason of war, civil war, rebellion, etc;
• The failure of the contractor to receive any sum that is payable to him on
termination or frustration of the contract if such failure is due to its having
become impossible to ascertain the amount or its due date because of war,
civil war, rebellion etc;
• Imposition of restrictions on import of goods or materials (not being the
contractor's plant or equipment) or cancellation of authority to import such
goods or cancellation of export license in India, for reasons beyond his
control; and
• Interruption or diversion of voyage outside India, resulting in his incurring in
respect of goods or materials exported from India, of additional handling,
transport or insurance charges, which cannot be recovered from the employer.
Risks not covered by Construction Works Policy
The Construction Works Policy excludes from its purview losses, which may be
sustained due to the following causes:
• Failure of the contractor and/or the employer (where the employer is not a
government) to obtain, issue or deliver any authority necessary under the law
of India or the employer's country for execution of the project and to make
payment thereof;
• Risks which can normally be insured with commercial insurers;
• Insolvency, default or negligence of any agent, seller or sub-contractor;

• Execution of any works or incurring of any expenses by the contractor after
the estimated date for completion of the contract unless, at the request of the
contractor, ECGC has agreed to a change in such date.
• Execution of any works or incurring of any expenses by the Contractor after
the employer has been in default in making any payment for a period of 120
days unless, on an application made by the contractor within 90 days of such
default, ECGC has agreed to his continuing execution of the contract despite
the employer's default
Premium
The premium rate for a Construction Works Policy is dependent on the classification
of the employer's country and the payment terms and will be quoted by ECGC on
request. The rate will be applied on the estimated contract value to arrive at the
amount of premium payable to ECGC. The premium is payable in advance. The
contractor is obliged to notify ECGC if the estimated contract value undergoes any
change and the premium will be adjusted accordingly.
Submit periodical declarations
The contractor is required to submit to the Corporation such periodical declarations as
may be prescribed by it relating to the execution of the contract and the position of
payments.
Ascertained loss
When a loss arises due to any of the risks insured, the amount of loss shall be
ascertained by ECGC, after the contractor files a claim under the Policy, in
accordance with the provisions of the Policy. However, where the contractor has been
simultaneously executing certain other contracts also for the same employer, all
amounts paid by the contractor shall be allocated to the amounts outstanding under all
the contracts in the chronological order of the due dates of payment of those amounts,
irrespective of whether such other contracts have been insured by ECGC or not.
Conditions in which claims are paid
If a claim is admitted under the Policy, the Corporation shall make payment of the
amount direct to the contractor's bank in India that may have a right or lien over the
receivables under the contract. The payment shall be subject to the contractor giving
ECGC an undertaking to the effect that he will take all steps, including such steps as
may be suggested by ECGC to recover the dues from the employer and to pass on to

ECGC its share of the amounts so recovered. The contractor shall, if required to do so,
support such an undertaking with a bank guarantee for an amount equal to the amount
of claim.
Claim and Recovery
The liability of the Corporation under the Policy will be in terms of Indian Rupee. If
the contract value is expressed in a foreign currency, it shall be converted into Indian
Rupees at the rate specified in the Policy, the rate being approximately the same as the
bank buying rate of exchange on the date of contract, for the purpose of determining
the amount covered and the Maximum Liability of ECGC under the Policy.
The same exchange rate shall be used by the contractor for the purpose of submitting
periodical declarations to ECGC. However, if the currency in which the employer has
to pay has been devalued before a claim is paid by ECGC, the amount claimed by the
contractor in Indian Rupees shall be based on the devalued rate. Recoveries will be
reckoned, net of recovery expenses at the actual rate at which the amounts recovered
were converted by the receiving bank into Rupees.
Requirements
The scope for disputes is very large. Besides, the contract value itself may only be
an estimate of the work to be done, since the contract may provide for cost
escalation, variation contracts, additional contracts, etc. So contractor should ensure
that the contract is well drafted to provide clarity of the obligations of the two
parties and for resolution of disputes that may arise in the course of execution of
the contract. Contractors may use the Standard Conditions of Contract
(International) prepared by the Federation International Des Ingenieurs Conseils
(FIDIC) jointly with the Federation International du Batiment et des Travaux
Publics (FIBTP).The contractor is required to submit to the ECGC such periodical
declarations (exchange rate shall be as specified in the policy) as may be prescribed
by it relating to the execution of the contract and the position of payments.
Recommendations
It is a comprehensive policy covering credit risk faced by Indian contractors
executing civil contracts abroad and hence recommended.
Specific Policy for Supply Contract

The Standard Policy is a whole turnover policy designed to provide a continuing
insurance for the regular flow of an exporter's shipments for which
credit period does not exceed 180 days. Contracts for export of
capital goods or turnkey projects or construction works or
rendering services abroad are not of a repetitive nature on a case-to
and they involve medium/long-term credits. Such transactions are,
therefore, insured by ECGC -case basis under specific policies.
Formalities are applied for contracts
All contracts for export on deferred payment terms and contracts for turnkey projects
and construction works abroad require prior clearance of Authorized Dealers, EXIM
Bank or the Working Group in terms of powers delegated to them as per exchange
control regulations (Kindly refer to 'Projects Exports Manual' of Reserve Bank of
India. Applications for the purpose are to be submitted to the Authorized Dealer (the
financing bank), which will forward applications beyond its delegated powers to the
EXIM Bank. Proposals for Specific Policy are to be made to ECGC after the contract
has been cleared by the Authorized Dealer, EXIM Bank or the Working Group, as the
case may be.
Risks are covered

Specific Shipment (Comprehensive Risks) Policy;
Specific Shipments (Political Risks) Policy;
Specific Contract (Comprehensive Risks) Policy; and
Specific Contract (Political Risks) Policy
Specific Shipments (Comprehensive Risks) Policy provides cover against all the risks
covered under the Standard Policy for shipments to be made under the contract in
question (For details of risks, click here). It is, therefore, the appropriate policy for an
exporter to take if the payments are open to both commercial and political risks.
Where the Commercial risks are absent, e.g. where the payments are guaranteed by a
bank or by the Government of the overseas country, the exporter may opt for the
Specific Shipments (Political Risks) Policy for which the premium rate will be lower
than that for the Comprehensive Risks Policy.
Specific Contract Policy (which also can be for comprehensive or political risks)
differs from Shipments Policy in that the former provides the exporter not only with
the post-shipment cover like the latter but also with some pre-shipment cover from the
date of contract. In case shipments could not be made due to any of the risks covered
or due to restriction on export of the goods from India, the loss in respect of
unshipped goods will also be covered under Contract Policies. Premium rates for
Contract Policies will be higher than that for Shipment Policies.
General conditions regarding terms of payment
To be eligible for cover under specific policies, the terms of payment for the export
contracts should be in line with customary practices in the international markets. At
least, 15% of the contract value should be payable before shipment including an
advance payment of at least 5%. The balance amount should be repayable in equal
semi-annual installments commencing six months after the date of shipment. Where
the contract provides for supply and erection of a complete plant, the first installment
may fall due after six months from the date of commissioning of the plant. The credit
period should not normally exceed 5 years. Longer credit period may be approved
only in the case of exceptionally large projects if the circumstances of the case justify
it. Adequate security should be obtained in the form of government guarantee or bank
guarantee.
The premium rates will depend on the country to which exports are to be made and
the repayment period.

In order to be sure about the availability of the cover, exporters are advised to get in-
principle approval of ECGC and obtain the premium rates well before concluding
contracts. If the terms and conditions of the contract undergo any change
subsequently, ECGC should be informed of the same, so that changes, if any, in the
applicable premium rates can be ascertained.
Premium payable
The entire premium is normally payable in advance. Installment facility may be
granted for payment of a part of the premium if the contract value is very large and if
the shipments are spread over a relatively long period, but the entire premium will
have to be paid by the time the last shipment is made. Interest will be charged for the
installment facility.
Export Turnover Policy
Turnover policy is a variation of the standard policy for the benefit
of large exporters who contribute not less than Rs. 10 lacs per
annum towards premium. Therefore all the exporters who will pay
a premium of Rs. 10 lacs in a year are entitled to avail of it.
Difference in turnover policy and standard policy
The turnover policy envisages projection of the export turnover of the exporter for a
year and the initial determination of the premium payable on that basis, subject to
adjustment at the end of the year based on actual. The policy provides additional
discount in premium with an added incentive for increasing the exports beyond the
projected turnover and also offers simplified procedure for premium remittance and
filing of shipment information. It also provides for higher discretionary credit limits
on overseas buyers, based on the total premium paid by the exporter under the policy.
The turnover policy is issued with a validity period of one year. In most of the other
respects the provisions relating to standard policy will apply to turnover policy.
Procedure for submission of shipping declarations
The holders of turnover policy need not submit monthly declarations of shipment.
Instead, they have only to submit a statement of shipments made during the quarter in
a prescribed format within 30 days of the end of the quarter.
Premium rates and discount rates

The basic premium rates applicable for the standard policy will apply to the turnover
policy also. However, an exporter holding a standard policy opts for turnover policy,
he will be entitled to an additional discount of 10% over and above the 'no claim
bonus' which he is enjoying under the standard policy, subject to a minimum total
discount of 20%. If an exporter not holding the standard policy avails of the turnover
policy, he will be entitled to a discount of 20%. In case of no claims in future, the
exporter will be entitled to further 'no claim bonus' and consequently total discount.
Thus the total discount could go up to 60%.
The premium calculated on the projected turnover is payable in four quarterly
installments (grant of facility of payment of premium in monthly instilments will be
considered on a case to case basis).
Consignment Exports Policy
(Stockholding Agent and Global Entity)
Economic liberalization and gradual removal of international barriers for trade and
commerce are opening up various new avenues of export
opportunities to Indian exporters of quality goods. One of the
methods being increasingly adopted by Indian exporters is
consignment exports where the goods are shipped and held in stock
overseas ready for sale to overseas ready for sale to overseas buyers,
as and when orders are received. To protect the Indian Exporters
from possible losses when selling goods to ultimate buyers, it was decided to
introduce Consignment Policy Cover.
There are two policies available for covering consignment export viz;
• Consignment Exports (Stock-holding Agent)
• Consignment Exports (Global Entity Policy)
Covered can available under which circumstances
A consignment Exports (Stock-holding Agent) Policy will be appropriate for each
exporter – stock holding agent combination provided the following criteria are
satisfied.
• Merchandise is shipped to an overseas entity in pursuance of an agency agreement;

• The overseas agent would be an independent and separate legal entity with no
associate/sister concern relationship with the exporter;
• The agent’s responsibilities could be any or all of the following, viz., receiving the
shipment, holding the goods in stock, identifying ultimate buyers and selling the
goods to them in accordance with the directions, if any, of his principal (exporter);
and
• The sales being made by the agent would be at the risk and on behalf of the exporter
(whether or not such sales are in the agent’s own name or otherwise) in consideration
of a commission or some similar reward or compensation on sales completed.
Insurance Cover for Buyer's Credit and Line of Credit
Buyer's Credit is a credit extended by a bank in India to an overseas
buyer enabling the buyer to pay for machinery and equipment that he
may be importing from India for a specific project. A Line of Credit
is a credit extended by a bank in India to an overseas bank,
institution or government for the purpose of facilitating import of a
variety of listed goods from India into the overseas country. A
number of importers in the overseas country may be importing the
goods under one Line of Credit.
ECGC has evolved schemes to protect the lending banks from certain risks of non-
payment. These covers take the form of an agreement between the lending bank and
ECGC and are issued on a case to case basis. Credit terms and the length of the credit
period should be in conformity with what is appropriate for the export of the relevant
items. There should be adequate security for the repayments to be made by the
borrower.
Cover can be granted either for political risks or for comprehensive risks. Political
risks covered under the scheme are:
• The occurrence of war between the country of the overseas party and India.
• The occurrence of war, hostilities, civil war, revolution, rebellion, insurrection
or other disturbances in the country of overseas party.
If ECGC agrees to provide comprehensive risks cover, the risk of protracted default of
the borrower to pay the amounts due under the loan agreement and insolvency of the

borrower, where applicable, will be covered in addition to the political risks
mentioned above. The premium rates applicable to comprehensive risk cover will
naturally be higher than that for political risks cover. Normally ECGC covers up to
85% of the loss.
The premium rates depend on the country to which exports are made and the period of
repayment.
Benefits
This policy pays in the event of loss to the bank on account of:
• Commercial Risk
1. The risk of protracted default of the borrower to pay the amounts due
under the loan agreement
2. Insolvency of the borrower
• Political Risks
1. The occurrence of war between the country of the overseas party and India.
2. The occurrence of war, hostilities, civil war, revolution, rebellion, insurrection
or other disturbances in the country of overseas party.
3. The operation of law or of an order, decree or regulation having the force of
law which in circumstances outside the control of the lender and/or the
overseas party, prevents, restricts or controls, the transfer of the sums due to
the lender by the overseas party under the Financial Agreement.
Premium
1. The premium rate depends on the country to which exports are made and the
period of repayment.
2. At least 20% of the total amount of premium should be paid in advance. The
balance amount of premium may be paid on a quarterly basis in proportion to
the amount of credit disbursed.
Requirements
• These covers take the form of agreement between ECGC and bank.
• Credit terms and the length of the credit period should be in conformity
with what is appropriate for the export of the relevant items.
• There should be adequate security for the repayments to be made by
the borrower.

Recommendations
This policy helps the banks in reducing the risk profile of their portfolio. Hence it is
recommended.
Maturity Factoring
Factoring is the purchase of accounts receivables. The supplier
(exporter) assigns his accounts receivables in favour of the Factor
and gives notice of assignment to the debtor. Factoring provides
• Financing, by way of pre-payment of the receivables;
• Sales ledger maintenance;

• Collection of receivables/recovery of bad debts and
• Credit protection against bad debts.
When pre-financing is provided but no credit protection is guaranteed by the Factor,
(i.e. the client will be required to refund the amount pre-financed, together with
interest thereon in the event of failure/insolvency of the debtor), it is called recourse
factoring.
When no pre-financing of the receivables is done, but the Factor undertakes to pay the
amount due only on maturity of the credit period, it is called maturity factoring.
ECGC has introduced non-recourse maturity export factoring.
Provided services
These are
• 100% credit guarantee protection against bad debts;
• Sales register maintenance in respect of factored transactions;
• Regular monitoring of outstanding credits, facilitating collection of
receivables on due date, 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-realisation of dues on factored export receivables
ECGC will promptly make the payment in Indian Rupees, of an equivalent amount,
immediately upon the crystallization of dues by the bank (exchange rate as on the date
of crystallization will apply).
Exporters get finance
ECGC 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 favour of the bank without any
additional payment or compliance or other requirements to be satisfied by the bank.
Benefits to the exporters
• Option to give easier credit terms to overseas customers - Better protection
than an irrevocable letter of credit, without the need to insist on establishing
one.
• Enables to offer more friendly delivery terms, like direct delivery to the
customer (as against DP/DA) without any risk.
• Reduced foreign bank handling charges on documents

• Substantial cost savings relating to monitoring and 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, due to more competitive terms offered to customers.
• Better security than even Letters of Credit (as there is a possibility of refusal
of payment in the latter on account of even minor discrepancies).
• Elimination of uncertainties relating to realisation 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.
Availability
• Seek setting up of the facility by forwarding a formal application to the
nearest office of ECGC, through the exporter's bank.
• Furnish full information with regard to business, including information on
overseas customers, the bills in respect of whom are to be factored.
• Get pre-approval by ECGC for the purpose and have a 'Permitted Limit'
(PL) established on each one of the overseas customers.
• Enter into a Factoring Agreement with ECGC and offer to ECGC for
factoring (with payment of factoring charges) all future export transactions
on DA/OD terms with those buyers on whom a PL has been established.
• Approach the exporter's bank for arranging advances on such factored
receivables, and notify the name of the bank to ECGC to enable ECGC to
communicate to the bank, the limit established on each customer.
• Ensure due performance of obligations to the buyer under export
contract/purchase order.
Specific benefits to the banks
For the banks, it would be a win-win situation all the way. Advances given against
ECGC-factored export receivables could an irrevocable letter of credit. Become
the most preferred export advance portfolio for a bank, even better than the
advances granted under
• 100% credit protection, free of cost.

• Prompt and immediate payment by ECGC of the full amount outstanding on
the receivable to the bank, within 3 days of crystallization of the dues, in the
event of non-realisation of factored receivables on 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. 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, on the buyer or on his country.
• 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.
Protection for the banks
• The bank would be furnished with a certified copy of the Factoring Agreement
concluded between the client and ECGC.
Role
• Encourage exporter-customers to explore the possibility of availing of the
factoring facility from ECGC.
• Consider sanctioning of additional limits to exporters.
• Help ECGC to collect factoring charges on each of the factored invoices.
Fees and charges
The factoring application fee payable initially is Rs.10,000/-. For setting up permitted
limits on each of his overseas customers, the exporter will have to pay a processing
fee equal to 0.05% of the permitted limit sought subject to a minimum of Rs.2000.
After this the factoring charges payable as and when an export bill is to be factored
depends on the country to which the export is made and the credit period.
Special Schemes
Transfer Guarantee
When a bank in India adds its confirmation to a foreign Letter
of Credit, it binds itself to honour the drafts drawn by the

beneficiary of the Letter of Credit without any recourse to him provided such drafts
are drawn strictly in accordance with the terms of the Letter of Credit. The confirming
bank will suffer a loss if the foreign bank fails to reimburse it with the amount paid to
the exporter. This may happen due to the insolvency or default of the opening bank or
due to certain political risks such as war, transfer delays or moratorium, which may
delay or prevent the transfer of funds to the bank in India. The Transfer Guarantee
seeks to safeguard banks in India against losses arising out of such risks.
Transfer Guarantee is issued, at the option of the bank to cover either political risks
alone, or both political and commercial risks. Loss due to political risks is covered
upto 90% and loss due to commercial risks upto 75%.
The premium rates depend on the country of export and the tenor of L/C.
Overseas Investment Guarantee
ECGC has evolved a scheme to provide protection for Indian Investments abroad.
Any investment made by way of equity capital or untied loan for
the purpose of setting up or expansion of overseas projects will
be eligible for cover under investment insurance. The investment
may be either in cash or in the form of export of Indian capital
goods and services. The cover would be available for the original
investment together with annual dividends or interest receivable.
The risks of war, expropriation and restriction on remittances are
covered under the scheme. As the investor would be having a hand in the
management of the joint venture, no cover for commercial risks would be provided
under the scheme.
Features of the Overseas Investment Insurance
For investment in any country to qualify for investment insurance, there should
preferably be a bilateral agreement protecting investment of one country in the other.
ECGC may consider providing cover in the absence of any such agreement provided
it is satisfied that the general laws of the country afford adequate protection to the
Indian investments.
The period of insurance cover will not normally exceed 15 years in case of projects
involving long construction period. The cover can be extended for a period of 15

years from the date of completion of the project subject to a maximum of 20 years
from the date of commencement of investment. Amount insured shall be reduced
progressively in the last five years of the insurance period.
Exchange Fluctuation Risk Cover
The Exchange Fluctuation Risk Cover is intended to provide a
measure of protection to exporters of capital goods, civil
engineering contractors and consultants who have often to
receive payments over a period of years for their exports,
construction works or services. Where such payments are to be
received in foreign currency, they are open to exchange
fluctuation risk as the forward exchange market does not provide
cover for such deferred payments.
Terms of the Exchange Fluctuation Risk Cover
Exchange Fluctuation Risk Cover is available for payments scheduled over a period
of 12 months or more, upto a maximum of 15 years. Cover can be obtained from the
date of bidding right up to the final installment. At the stage of bidding, an
exporter/contractor can obtain Exchange Fluctuation Risk (Bid) Cover. The basis for
cover will be a reference rate agreed upon. The reference rate can be the rate
prevailing on the date of bid or rate approximating it. The cover will be provided
initially for a period of twelve months and can be extended if necessary. If the bid is
successful, the exporter/contractor is required to obtain Exchange Fluctuation
(Contract) cover for all payments due under the contract. The reference rate for the
contract cover will be either the reference rate used for the Bid Cover or the rate
prevailing on the date of contract, at the option of the exporter/contractor. If the bid is
unsuccessful 75 percent of the premium paid by the exporter/contractor is refunded to
him.
Features
The Exchange Fluctuation Risk (Contract) Cover can be issued, if the payments under
the contract are scheduled to be received beyond 12 months from the date of contract
but in such cases, the cover will apply for any installment falling due within 12
months as well. Cover will be available for all amounts receivable under the contract,
whether it is payment for goods or services or interest or any other payment.

Contracts coming under Buyer's credit and Line of Credit are also eligible for cover
under the schemes.
Currencies covered
Cover under the schemes is available for payments specified in US Dollar, Pound
Sterling, Deustche Mark, Japanese Yen, French Franc, Swiss Franc, UAE Dirham and
Australian Dollar. However, cover can be extended for payment specified in other
convertible currencies at the discretion of ECGC.
Bear / receive loss or gain in exchange rate
The loss or gain within a range of 2 percent of the reference rate will go to the
exporter's account. If the loss exceeds 2 percent, ECGC will make good the portion of
loss in excess of 2 percent but not exceeding 35 percent of the reference rate. In other
words, loss/gain upto 2 percent and beyond 35 percent of the reference rate will be to
the exporter's account. If there is gain in excess of 2 percent and upto 35 percent it
will be turned over to ECGC.
The rate of premium is 40 paise per Rs.100/- per year or 10 paise per Rs.100/- per
quarter for the bid cover. The total premium is payable at the time of issue of the
Policy. Premium for contract cover is also payable at the rate of 40 paise per Rs.100/-
per annum. Ten percent of the total premium payable and premium for the first two
years should be paid at the time of issue of the Policy. Thereafter, the annual premium
will have to be paid in such a manner that premium for two years ahead is always kept
paid to the Corporation.
Exchange Fluctuation Risk Cover will normally be provided along with suitable credit
insurance cover. There is, however, provision to grant the cover independently also in
which case premium will be loaded by 20%.
These schemes are targeted at specific audiences such as banks, investors in foreign
countries and ex
Guarantees to Banks
Packing Credit Guarantee
Timely and adequate credit facilities at the pre-shipment stage are essential for
exporters to realize their full export potential. Exporters may not,
however, be easily able to obtain such facilities from their

bankers for several reasons, e.g. the exporter may be relatively new to export
business, the extent of facilities needed by him may be out of proportion to the equity
of the firms or the value of collateral offered by the exporter may be inadequate. The
Packing Credit Guarantee of ECGC helps the exporter to obtain better and adequate
facilities from their bankers. The Guarantees assure the banks that, in the event of an
exporter failing to discharge his liabilities to the bank, ECGC would make good a
major portion of the bank's loss. The bank is required to be co-insurer to the extent of
the remaining loss.
Loans and advances for Packing Credit Guarantee
Any loan given to an exporter for the manufacture, processing, purchasing or packing
of goods meant for export against a firm order or Letter of Credit qualifies for
Packing Credit Guarantee. Pre-shipment advances given by banks to parties who enter
into contracts for export of services or for construction works abroad to meet
preliminary expenses in connection with such contracts are also eligible for cover
under the Guarantee. The requirement of lodgment of Letter of Credit or export order
for granting packing credit advances is waived if the bank grants such advances in
accordance with the instructions of the Reserve Bank of India in that respect.
General conditions
The Guarantee, issued for a period of 12 months based on a proposal from the bank,
covers all the advances that may be made by the bank during the period to an
individual exporter within an approved limit. The bank is required to submit monthly
declarations of advances and repayments and to pay premium at the rate of 13 paise
per Rs.100 per month on the highest amount outstanding on any day. Approval of
ECGC has to be obtained if the period for repayment of any advance is to be extended
beyond 360 days from the date of advance. The bank will be entitled to claim 66 2/3%
of its loss from ECGC if the entire amount due from the exporter is not recovered
within a period of 4 months from the due date of repayment. The claims are payable if
ECGC is satisfied that the bank had conducted the account with normal banking
prudence and has also complied with the terms and conditions of the Guarantee.
Benefits
ECGC issues Whole-turnover Packing Credit Guarantee (WTPCG) to banks which
undertake to obtain cover for packing credit advances granted to all its customers on
all-India basis. In consideration of the large volume of business offered for cover and
the spread of risks that will thus become available to it, the Corporation grants a

higher percentage of cover, lower premium rate and considerable reduction in
procedural formalities.
Applicable of premium rates
A differential premium rate is now applicable for the banks, which have opted for
WTPCG. The rates vary between 7 paise to 10 paise per Rs.100 per month payable on
the average outstanding for the month. The rate for each bank is fixed based on the
actual claim premium ratio for the bank for the period of immediately preceding five
years. The percentage of cover is normally 75% for most of the banks (except a few
banks for which it is 65%, taking into account the extremely high claim premium ratio
of those banks). There is a reduction of 10% in the cover if the total advance
sanctioned to any particular exporter exceeds the total premium received from the
bank (for all the accounts put together) in the immediately preceding year; even in
respect of such exporters, the lower percentage of cover will apply only for the
advances sanctioned over and above the value of such total premium.
Export Production Finance Guarantee
The purpose of this Guarantee is to enable banks to sanction
advances at the pre-shipment stage to the full extent of cost of
production when it exceeds the f.o.b. value of the contract/order, the
differences representing incentive/duty drawback receivable.
Premium covered
The extent of cover and the premium rate are the same as for Packing Credit
Guarantee. Banks which have opted for WTPCG are eligible for concessionary
premium rate.
Post-Shipment Export Credit Guarantee
Packing credit sanctioned, if any, to an exporter is treated as repaid once the exporter
effects the shipment and submits the export documents to the
bank. If the exporter intends to continue the credit facilities till
the value of shipment is realised from the foreign buyer, he has
to avail of post-shipment credit. The post shipment credit
guarantee provides protection to banks against non-realisation

of export proceeds and the resultant failure of the exporter to repay the advances
availed.
Post-shipment finance given to the exporters by banks through purchase, negotiation
or discount of export bills or advances against bills sent on collection basis qualifies
for this guarantee. It is necessary, however, that the exporter concerned should hold
suitable policy of ECGC to cover the overseas credit risks. The premium rate for this
guarantee is 7 paise per Rs.100 per month. The percentage of loss covered under the
Individual Post-Shipment guarantee is 75.
Individual Post-Shipment Credit Guarantee can also be obtained for finance granted
against L/C bills, even where an exporter does not hold an ECGC Policy, provided
that the exporter makes shipments solely against Letters of Credit. The premium rate
for this cover is 10 paise per Rs.100 per month on the highest amount outstanding on
any day during the month and the percentage of cover is 75. Advances against bills
under Letters of Credit/confirmed orders from banks/buyers in countries placed under
restricted cover shall, however, be subject to prior approval of the Corporation.
Available benefits to banks
This guarantee can also be issued on whole turnover basis, offering a higher
percentage of cover at a reduced rate of premium. The percentage of cover under the
Whole-turnover Post shipment Guarantees is 90 for advances granted to exporters
holding ECGC policy. Advances to non-policyholders are also covered with the
percentage of cover being 65. The premium rate is 5 paise per Rs.100/- per month if
advances against L/C bills are also covered under the guarantee and 6 paise otherwise.
Export Finance Guarantee
This guarantee covers post-shipment advances granted by banks to exporters against
export incentives receivable in the form of cash assistance, duty
drawback, etc.
Features of Export Finance Guarantee

The premium rate for this guarantee is 7 paise per Rs.100 per month and the cover is
75 percent. Banks having WTPSG are eligible for concessional premium rate and
higher percentage of cover.
Export Performance Guarantee
Exporters are sometimes called upon to execute bonds duly
guaranteed by an Indian bank at various stages of export
business. An exporter who desires to quote for a foreign tender
may have to furnish a bank guarantee in the form of a bid bond.
If he wins the contract, he may have to furnish bank guarantees
to foreign buyers to ensure due performance or against advance
payment or in lieu of retention money or to a foreign bank in
case he has to raise overseas finance for his contract. Further, for obtaining import
licenses for raw materials or capital goods, exporters may have to execute an
undertaking to export goods of a specified value within a stipulated time, duly
supported by bank guarantees. Bank guarantees are also furnished by exporters to the
Customs, Central Excise, or Sales Tax authorities for the purpose of clearing goods
without payment of duty or for exemption from tax for goods procured for export.
Exporters may also be required to furnish guarantees in support of export obligations
to Export Promotion Councils, Commodity Boards, and The State Trading
Corporation of India, the Minerals and Metals and Metals Trading Corporation of
India etc.
An export proposal may be frustrated if the exporter's bank is unwilling to issue a
guarantee, which the exporter may be required to furnish. The Export Performance
Guarantee provided by ECGC is aimed at helping the exporter in such cases. The
Guarantee, which is in the nature of a counter guarantee to the bank, is issued to
protect the bank against losses that it may suffer on account of guarantees given by it
on behalf of exporters. This protection is intended to encourage banks to give
guarantees on a liberal basis for export purposes.
Normally, cover is extended upto 75 percent of loss in the case of guarantees in
connection with bid bonds, performance bonds, advance payment and local finance
guarantees and guarantees in lieu of retention money. In the case of bid bonds relating
to exports on medium/long term credit, overseas projects, and projects in India
financed by international financial institutions as well as supplies to such projects,

ECGC is agreeable to issue Export Performance Guarantee on payment of 25% of the
prescribed premium. The balance of 75% becomes payable by the bankers if the
exporter succeeds in the bid and gets the contract.
Applicable of Premium rates
While the premium rate for guarantee issued to cover bond relating to exports on
short-term credit is 0.90% p.a. for 75% cover, it is lower for bonds relating to exports
on deferred credit and projects, namely 0.80% p.a. for 75% cover and 0.95% p.a. for
90% cover.
Export Finance (Overseas Lending) Guarantee
If a bank financing an overseas project provides a foreign currency
loan to the contractor, it can protect itself from the risk of non-
payment by the contractor by obtaining Export Finance (Overseas
Lending) Guarantee.
Applicable of Premium rates
The premium rate is 0.90% per annum for 75% cover and 1.08% per annum for 90%
cover. Premium is payable in Indian Rupees. Claims under the Guarantee will also be
paid in Indian Rupees.
ECGC in today’s market
Many countries of the world have started adopting market oriented economy and the
world is being integrated into a global village. The market oriented economy also
means that there will be keen competition in all entrepreneurial activity and the fittest
will only survive. The emphasis will be on quality, price offer competitive prices
industries will necessarily have to give greater importance to research and
development and mass production. There will be more collaboration and technology

and capital are bound to flow to developing countries where the production costs are
cheaper. With mass production the companies cannot contend with only domestic
trade and are compelled to consider the world as a market to increase their sales. This
being the scenario, there will be grater trade among countries resulting in new entrants
in the export - import trade. Besides, quality and price, credit is going to play an
important role in clinching an export deal. Credit while becoming an instrument in
expanding export trade will increase payment risks in our export transaction.
Payments for exports are always opened to risks at the best of times. The risks have
assumed even larger proportions today, due to the political and economic changes that
are sweeping the world over. It is in such a situation the need for export credit
insurance is felt, even for credit transactions which are normally considered as safe.
Export Credit Guarantee Corporation of India Ltd. has been providing the facility of
export credit in the country since it was set up in the tear 1957. It is the oldest export
credit insurance agency in the developing world. ECGC is a company wholly owned
by the Government of India and functions under the administrative control of the
Ministry of Commerce. The primary goal of ECGC is to support and strengthen the
export promotion drive in India by providing a range of credit risk insurance covers to
exporters against loss in export
ECEG Has designed several schemes of Guarantees to Banks
with a view to enhancing the creditworthiness of the exporters
so that they would be able to secure liberal and adequate
facilities from their bankers.
of goods and service also by offering guarantee covers to banks and financial
institutions of enable exporters to obtain better facilities from them.
ECGC basically provides two types of services. Export Credit insurance policies are
issued to the exporters protecting them from credit related risks and enabling them to
expand their export trade. ECGC insures exporters against the risks of not being paid
by the overseas customers. There risks include default or insolvency of the buyer,
exchange difficulties which may block or delay remittance and new restrictions on
imports imposed in the buyer's country. The corporation issues Specific policies for
exports of high value goods where payment are normally made on deferred terms.
Such exports are in the nature of export of capital goods, constructions works, turnkey
jobs or rendering services abroad.

Guarantees to Banks: Timely and adequate credit facilities, at the pre - shipment as
well as post - shipment stage are essential for exporters to realize their full export
potential.
Exporters may not however, be able to obtain such facilities from their bankers for
several reasons e.g., the exporter may be relatively new to export business the extent
of facilities needed by him may be out of proportion to the equity of the firm or the
value of the collaterals offered by the equity of the firm or the value of the collaterals
offered by the exporter may; be inadequate. ECGC has designed several scheme of
Guarantees to Banks with a view to enhancing the creditworthiness of the exporters so
that they would be able to secure liberal and adequate facilities from their banks. The
Guarantees seek to achieve this objective by assuring the banks that in the event of an
exporter failing to discharge his liabilities to the banks and thereby making the bank
incur a loss, ECGC would make good a major portion of the bank's loss. The bank is
required to be co - insurer to the extent of the remaining loss. Any amount recovered
from the exporter subsequent to payment of claims shall be shared between the
corporation and the bank in the same ratio in which the loss was borne by them at the
time of settlement of claim. Recovery expenses shall be first change on the amounts
recovered.
Exim Bank, ECGC, MIGA Partnership
New Partnership Provides Package of Financing and Insurance Solutions for
Indian Companies Investing Overseas
Export-Import Bank of India (Exim Bank), Export Credit Guarantee Corporation of
India Ltd. (ECGC) and the World Bank's Multilateral Investment Guarantee Agency
(MIGA) have formed a partnership that will provide a package of services that
combines competitively-priced financing with risk mitigation to Indian companies
investing overseas.

The objective is to support the outward expansion Indian companies, as they
increasingly seek opportunities to invest overseas. Outbound foreign direct investment
by Indian companies is about $1 billion a year and growing.
"By providing financing and risk mitigation tools, the partnership between MIGA,
Exim Bank and ECGC would cater to the needs of the Indian enterprise and
encourage them in venturing abroad with higher level of confidence", said Mr. T.C.
Venkat Subramanian, Chairman & Managing Director of Exim Bank, during the
launch of the partnership in Mumbai.
Under the new arrangement, Exim Bank will provide the needed financing, while
ECGC and MIGA will provide insurance against the risks that are out of investors'
control such as currency inconvertibility and transfer restrictions; expropriation; war,
terrorism and civil disturbance; and breach of contract.
MIGA and ECGC will work together largely through reinsurance/co-insurance
arrangements. Investors can opt for either financing or insurance or the combined
package of services. Additionally, investors can interact locally with ECGC while still
benefiting from the World Bank's involvement.
MIGA's presence brings the World Bank umbrella of deterrence against host
government actions that might affect project viability, says Luis Dodero, Vice
President and General Counsel of MIGA. "MIGA's involvement can help protect
investments, and in the event that disagreements do occur between investors and host
governments, MIGA can mediate disputes and prevent claims from arising and
disrupting projects." MIGA also brings unparalleled knowledge of country conditions
and opportunities in developing countries, as well as international best practice in
terms of environmental and social standards.
Investors will able to take advantage of all the benefits of partnership with the World
Bank without having to interact directly with MIGA staff in Washington DC. Says
Mr. P.K. Dash, Chairman-cum-Managing Director of ECGC, "The new arrangement
will have a very strong impact on efficiency and turnaround time. Investors can, for
example, work with a primary contact at ECGC who coordinates the process and

eliminates duplication. Documentation for the non-commercial risk insurance aspect
of the partnership has been standardized by MIGA and ECGC."
Exporter's Credit Insurance
ECGC JOINS HANDS WITH SIB UNDER BANCASSURANCE MODEL:
Export Credit Guarantee Corporation of India (ECGC) has appointed SIB as its
Corporate Agent on 28.10.2003 to market their Exporter’s credit insurance policies.
As SIB is already extending the Life and Non-Life insurance facilities, it is now
equipped to cover the entire range of insurance products under one roof.
ECGC, a Government of India enterprise established to promote Export / Import in
our country, provides a range of credit risk insurance covers to exporters against loss

in export of goods. SIB with more than 400 branches across 14 States will facilitate
the distribution of credit policies of ECGC. The customers of other banks may also
approach SBI.
QUESTIONAARIES
1. In what way ECGC’s is different from other insurance company?
2. Objective of ECGC?
3. Necessary documents required by ECGC while exporting?
4. ECGC’s roles in today’s market?
5. Why company/customer come for ECGC?
6. Tax benefits are available incase of ECGC?
7. What types of care ECGC provide to their customers.

8. What kinds of problem do the management has to suffer?
9. In today’s market which product of ECGC are in more demand?
10. What are the main reasons for profitability of the ECGC?
11. How ECGC motivate their Employee?
12. Do ECGC gives training/career growth to their employees or any other such
kinds of helps to motivate their employees?
13. Upto what extent ECGC provide credit guarantees?
14. As per the name suggest it is an export company then also expect exporter any
one else can adopt ECGC products and services?
15. What kinds of problem are mostly faced by customer and how to try to
manage it?
16. In brief explain the organization structure of ECGC? What types of duties
they provide by them?
17. What are the main areas of risks faced by your ECGC? How you manage
those risks?
18. According to you, where will ECGC in future?
Answers
1. As per the name suggest it is an export credit guarantees corporation we insure
and cover the export goods then either then anything else. As per there are
many more insurance company who like to compete with us they are also
insuring the export goods but the products which we have is different from
other insurance companies and people are satisfied with our products and
services and they like to prefer this products.
2. The objectives of insurance company are as follow:-
1. To encourage, facilitate and develop trade between India and other countries.

2. To provide investment insurance to Indian investors undertaking investments
in foreign countries.
3. To operate the various schemes in such a manner that the Corporation would
generate enough surpluses to enable it to meet any losses that may result from
unforeseen political situations.
4. To introduce new product lines so as to diversify into trade related services.
3. Code document & submitted approval to office address.
4. As per today situation our country is in a stage of growing if it will not export it
will not survive in today market to be in competition the company needs to export
their goods. While exporting the goods there is always a fear in the minds of
customers or company to avoid that risks the company go for ECGC.
5. ECGC plays quite good role in today’s market. As per the many company are
exporting their product in international markets to compete with other exporting
country. ECGC encourage their customer to export their products by insuring their
goods.
6. No, as far as ECGC is concern there is no tax benefits are available.
7. ECGC gives much important to their customer. As far as any insurance company’s
agent concern they try to solve the problem of their customer by giving proper advice
to their customers.
8. The first main problem of the management has to suffer in point of claim
settlement. While claiming the policy the customer has to claim within the 30 days.
Customer knows all the facts but still they blame the management of the company.
9. Leather and garments.
10. Working of the employees.
11. By giving performance appraisal and by promoting them, increments and etc.
12. Yes, for further studies they encourage their employees by giving proper facilities
such as paying fees. And other types of helps but if the employees are not serious

about it and they fails or leave their studies in middle then they have to bear the loss
and what the company has given to them they have to return back to the company or
if they pass in the exam they have to submit all the relevant thing with the pass result.
13. It depends upon the policy. If no application for credit limit on a buyer has been
made, ECGC accept liability as under:-
Commercial risks upto Rs. 10,00,000 for DP/CAD transactions on a particular buyer
subject to the condition that claims will be limited to two buyers during the currency
of the policy.
Commercial risks upto a maximum of Rs.7,50,000 for DA transactions and Rs.
20,00,000 for DP/CAD transactions provided that.
a) At least three shipments have been effected by the exporter to the buyer during
the preceding 2 years on similar payment terms and at least on of them was
not less than the discretionary limit availed of by the exporter and
b) The buyer had made payment for the shipment on the due dates.
14. No
15. Customer mostly finding the problem while settlement of claims & filling the
procedures. They try to solve their problem of their customer.
16. The organization structure of the ECGC has six sectors (two business and four
control, support and administrative sectors) as under:
1. Large Exporters and Bank Sector
2. Small and Medium Exporters Sector
3. Finance Sector
4. Internal Audit Sector
5. Corporate Sector
6. Company Secretariat and Legal Affairs Sector
Activities undertaken in these sectors are provided

They request exporters and banks to
• contact the Division Heads as per details given to obtain the services.
• send proposals for our schemes in the prescribed
Format
• Visit to their website for the further details.
17. It has great future, no export no future .to be in the international market each and
every company has to export their products.
TIME NORMS FOR APPROVAL OF CREDIT LIMIT
APPLICATIONS AND SETTLEMENT OF CLAIMS
Sr. no Indicators
SURVEY REPORT
As ECGC is an oldest corporation then also their no other company to compete with
ECGC. ECGC till today are in booming stage as per the survey is considered the
customers are satisfied with the management activities. Management tries to solve the
customer problem and give proper advice to their customers to create confidence
amongst the customers. According to my point of view I came across many such
government company are not performing their work properly and they are showing
laziness in their work where as ECGC is concern they are satisfying their customer by
giving proper facilities to their customer. Governments are keen to promote exports

because exports improve a country’s balance of payments position. For this reason,
governments in various countries provide export insurance cover through government
or the quasi- governmental organizations.
Experience of my survey doing I receive good feedback from the ECGC customer. as
every coin has to face the customer are satisfied with all the activities of the
corporation but still human wants are unlimited as much we get the much more we
want, the much more we get the still more we want. They need some improvement
in their working activities.
TIME NORMS FOR APPROVAL OF CREDIT LIMIT
APPLICATIONS AND SETTLEMENT OF CLAIMS
Sr.No. Indicators Units
(No. of days)
1. Average time taken for approval

of credit limit applications
a) for overseas buyers on record 9
b) for new overseas buyers 14
2. Average time in days taken for
Settlement of claims
i) Under short term policies
a) 25% claims 27
b) 75% claims 81
ii) Under short term guarantees 135
OUR COMMITMENT TO
CLIENTS WITH GRIEVANCES
The clients seeking redress of the grievances with Branches under various Regional
Offices can expect
• That grievances shall be acknowledged and
forwarded to concerned higher authority within 15 days
• Visitors to our office will be treated with

Courtesy and heard patiently to facilitate
Solving of their problems.
WE REQUEST THE CLIENTS WITH
GRIEVANCES TO:
Approach concerned Branch Manager / Regional Manager of ECGC
• Provide a clear statement of grievance giving the background of
officials previously approached for redress
• Understand that some grievances take some time to redress
• Visit our website www.ecgcindia.com for details

Export credit insurance project

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