News:The Export Credit Guarantee Corporation of India(ECGC) has said that the Nirvik scheme announced by the Union Government would give a fillip to export lending and insurance cover for export credit.
About the scheme:
- The scheme aims to ease the lending process and enhance loan availability for exporters.
- Under the scheme,the insurance cover guaranteed will cover up to 90% of the principal and interest.The insurance cover will include both pre and post-shipment credit.
- The enhanced cover will ensure that Foreign and Rupee export credit interest rates will be below 4% and 8% respectively for exporters.
- The gems, jewellery and diamond(GJD) sector borrowers with a limit of over Rs 80 crore will have a higher premium rate in comparison to the non-GJD sector borrowers of this category due to the higher loss ratio.
- The scheme also mandates inspection of bank documents and records by ECGC officials for losses exceeding Rs.10 crore as against the present Rs 1 crore.
Significance of the scheme:
- This scheme will help make Indian exports competitive and make ECGC procedures exporter friendly, benefiting MSME exporters.
- The insurance cover is also expected to bring down the cost of credit due to capital relief, less provision requirement and liquidity due to quick settlement of claims.
Export Credit Guarantee Corporation(ECGC):
- ECGC is a premier export credit agency of the Government of India to provide Export Credit Insurance Services to facilitate exports from the country.It was founded in 1957.It is headquartered at Mumbai.
- The ECGC offers credit insurance schemes to exporters to protect them against losses due to non-payment of export dues by overseas buyers due to political or commercial risks.