Functions of Export Credit Guarantee Corporation of India

Introduction

(ECGC) functions under the ministry of commerce and industry, Department of Commerce, Government of India. It is a central government undertaking body to provide export credit guarantee/ insurance to the exporters in the case of the default of payments by the buyer. If a situation arises wherein, the buyer fails to make the payment to the seller (exporter), the ECGC acts as an insurance firm who guarantees the payment to the exporter.
It is managed by a Board of Directors comprising representatives of the Government, Reserve Bank of India, banking, and insurance and exporting community
It was initially registered as Export Risk Insurance Corporation (ERIC) on 30th July 1957 in Mumbai as a Private Ltd. Company. Later ERIC’s name was changed to Export Credit & Guarantee Corporation Ltd in 1964 and to Export Credit Guarantee Corporation of India in 1983. With effect from August 8th, 2014, it was renamed as ECGC limited.

What does ECGC do?

In case of loss of export of goods and services, it provides credit risk insurance covers to exporters
Export Credit Insurance covers are offered to banks and financial institutions to enable exporters to obtain better facilities from them.
It assists exporters in recovering bad debts.
It provides information regarding different countries with its own credit ratings
For Indian companies investing in joint ventures abroad in the form of equity or loan, Overseas Investment Insurance is provided.
It offers insurance protection to exporters in the case of any payment risks.
It provides guidance to activities related to export.
It Provides information regarding creditworthiness of overseas buyers

Why do we need insurance for export credit insurance?

Insurance of the exports is important even at the best times. There can be a risk of default payments for the exports and these risks depend on political and economic changes around the world. For example, there can be blockage or delay of delivery of the exports due to a civil war. Any disturbance in the economy of the export or import company can also provide these risks. There could be restrictions imposed on either payment of the export or import of the goods due to instability in the nation. This can result in default buyers. There can be a case of the buyer going bankrupt due to political and economic uncertainties. To avoid the risk of such default payments and default buyers insurance of the exports is necessary.

Procedures with ECGC to cover insurance:

A purchase order is issued to the seller by the buyer. The purchase order contains complete details about the buyer who has to make payment. The seller (exporter) approaches ECGC to get approval on the buyer and the amount which can be shipped. The ECGC with the help of overseas network provides details regarding the creditworthiness of the buyer. ECGC collects some amount on the export and issues insurance policy.

Headquarter – Mumbai, Maharashtra
Chairman & Managing Director - Smt. Geetha Muralidhar
Executive Director - Shri. M Senthilnathan