ECGC reduces premium for exporters by 17%

20 May '16

2 min read

The government-owned Export Credit Guarantee Corporation (ECGC) has reduced premium rates on an average by 17 per cent for exporters, but it is unlikely to cut rates on providing covers to banks as losses from bank portfolios have been rising.

“We are giving on an average 17 per cent discount from April 1 onwards. The discounts vary between 5 per cent and 45 per cent depending on the country, risk and terms of payment,” Chairman-cum-Managing Director of ECGC Geeta Muralidhar told reporters.

“However, the premium rates on bank covers will remain flat and will be reviewed once they come up for renewal,” added Muralidhar.

The loss ratio of each bank differs and the premium rates for a bank would depend on its loss experience. While the exporters portfolio is profitable for ECGC, the banks’ portfolio has been loss making.

ECGC paid total claims of Rs 1,122.84 crore to both Indian exporters and financing banks during 2015-16. Of these, 439 claims worth Rs 127.32 crore were paid to exporters under direct policies and 172 claims worth Rs 995.52 crore were paid to financing banks under the export credit insurance covers issued to banks.

Major sectors under which the claims arose include readymade garments, synthetic yarn and leather.

ECGC offers export credit insurance for banks short term where it covers pre-shipment, post shipment and covers against bank guarantee. (SH)

Fibre2Fashion News Desk – India

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