ECGC-EXIM BANK

EXPORTS

PROVISIONS

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA (ECGC):

Export Credit Guarantee Corporation of India Ltd. (ECGC) is a Government of India Enterprise which provides

export credit insurance facilities to exporters and banks in India. Over the years, it has evolved various export credit

risk insurance products to suit the requirements of Indian exporters and commercial banks. ECGC is the seventh

largest credit insurer of the world in terms of coverage of national exports. ECGC is essentially an export promotion

organization, seeking to improve the competitive capacity of Indian exporters by giving them credit insurance

covers comparable to those available to their competitors from most other countries. It provides a range of credit

risk insurance covers to the exporters against loss in export of goods and services. It also offers Export Credit

Insurance covers to banks and financial institutions to enable exporters to obtain better facilities from them.

Provides Overseas Investment Insurance to Indian companies investing in joint ventures abroad in the form of

equity or loan

It helps exporters in the following areas:

Offers insurance protection to exporters against payment risks. Provides guidance in export-related activities Makes available information on different countries with its own credit ratings. Makes it easy to obtain export finance from banks/financial institutions. Assists exporters in recovering bad debts. Provides information on credit-worthiness of overseas buyers.

Various Risks covered by ECGC are summarized as under:

ECGC SCHEMES FOR EXPORTERS AND BANKS:

Short-Term Exports

(i) Policy Schemes

Standard Policy

An exporter whose annual export turnover is more than Rs.50 lakhs is eligible for this Policy to cover all his exports.

Small Exporters Policy

An exporter whose annual export turnover is not more than Rs.50 lakhs is eligible for this Policy.

Specific Shipment Policies-Short Term (SSP-ST)

These policies can be availed of by exporters who do not hold Standard Policy or by exporter having Standard

Policy, in respect of shipments permitted to be excluded from the purview of the Standard Policy. Exporter can pick

and choose the contract/shipment to be covered and indicate the type of cover required.

Exports (Specific Buyer) Policy

The Specific Buyer Policy provides cover for shipments made to a particular buyer. An exporter not holding the

Standard Policy can avail of this to cover their shipments to any selected buyer. Exporters holding Standard Policy

can also avail this policy for covering shipments to an individual buyer, if all shipments to such buyer have been

permitted to be excluded from the purview of the Standard Policy.

Exports Turnover Policy

Turnover Policy is for the benefit of large exporters who contribute not less than Rs.10 lakhs per annum towards

premium. The policy envisages projection of the export turnover of the policyholder 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 actuals.

Buyer Exposure Policy

The Buyer Exposure Policy is to insure the exporters having large number of shipments with simplified procedure

and rationalized premium. An exporter can choose to obtain exposure based cover on a selected buyer. The cover

would be against commercial and political risks. If the exporter has opted for commercial and political risks cover,

failure of LC opening bank with World Rank up to 25000 as per latest Bankers Almanac is available. If exporter opts

for only political risks for LC exports premium at a less rate is offered.

Multi-Buyer Exposure Policy

Some exporters export to large number of buyers. The number of shipments made by them is also quite high. In

order to meet the needs of such exporters, Multi-buyer Exposure Policy is introduced. Cover would be available for

exports to the buyers in countries listed under open cover category as long as the buyer is not in ―the list of buyers

who have come to the adverse notice of the Corporation‖ maintained by the Corporation and available on its

website http://www.ecgcindia.in. 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.

Software Projects Policy

The Software projects policy will provide protection to exporters of software projects and related services where the

payments will be received in foreign exchange on deferred basis based on the milestones completed.

Consignment Exports Policy (Global Entity)

Indian exporters ship goods to their own branch office overseas ready for sale to overseas buyers, as and when

orders are received. This is known as Consignment exports. A separate credit insurance policy is introduced to cover

exclusively shipments by the exporters to their branches overseas on consignment basis taking into account their

special features, providing adequate incentives and simplifying the procedures considerably.

Consignment Exports Policy (Stockholding Agent)

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. A method increasingly adopted

by Indian exporters is consigning goods to an agent overseas who holds the stock ready for sale to overseas

buyers, as and when orders are received. Thus, a separate credit insurance policy is introduced to cover exclusively

shipments on consignment basis through agents taking into account their special features, providing adequate

incentives and simplifying the procedures considerably.

Services Policy

Services Policy offer protection to Indian firms against payment risks involved in rendering services to foreign

parties. A wide range of services like technical or professional services, hiring or leasing can be covered under these

policies.

Maturity Factoring

The Maturity Factoring Scheme as designed by ECGC has certain unique features and does not exactly fit into the

conventional mould of maturity factoring. The changes devised are intended to give the clients the benefits of full

factoring services through the Maturity Factoring Scheme, thus effectively addressing the needs of exporters to

avail of pre-finance (advance) on the receivables, for their working capital requirements. One important feature is

the special benefits envisaged for banks under the scheme by which the banks get reimbursed in a non payment

situation irrespective of any payment problems with the overseas buyers.

IT – Enabled Services (Specific Customer) Policy

IT-enabled Services (Specific Customer) Policy would be given in respect of contracts for rendering IT services

during a defined period with billing on the basis of services rendered during a period say, a week, a month or a

quarter.

ii) Guarantee Schemes

ECIB - PC

Under the scheme the bank is protected against non payment due to default or insolvency of the any of the

exporter clients availing packing credit for short-term exports from any of its branch offices.

ECIB-PS

Under the scheme the bank is protected against non payment due to default or insolvency of the any of the

exporter clients availing post shipment export credit for Short-term exports from any of its branch offices.

PACKING CREDIT GUARANTEE - BRANCH

A branch of the bank (not having WTPCG) can avail this guarantee to protect itself against non payment due to

default or insolvency of any of its exporter clients to whom packing credit has been extended by the branch.

PACKING CREDIT GUARANTEE - SECTORAL

A zonal/regional office of a bank can avail this guarantee to protect against non payment due to default or

insolvency of any of its exporter clients who are availing packing credit from any of the branch offices reporting to

them.

INDIVIDUAL PACKING CREDIT GUARANTEE (IPCG)

A bank branch can avail cover for packing credit facility extended to a specific exporter client against non payment

by the exporter due to insolvency or default.

INDIVIDUAL POST SHIPMENT CREDIT GUARANTEE (IPSG)

A bank branch can avail cover for post shipment credit facility extended to a specific exporter client against non

payment by the exporter due to insolvency or default.

EXPORT PERFORMANCE GUARANTEE (EPG)

Wherever banks are called upon to execute a bank guarantees on behalf of their exporter clients to facilitate

exports, banks can protect themselves under this cover in case of non-payment by the exporter due to insolvency

or default due to invocation of the bank guarantee by the beneficiary.

EXPORT PRODUCTION FINANCE GUARANTEE (EPFG) Under the scheme, banks can avail cover for additional

credit extended to an exporter client at the pre shipment stage where the raw material cost exceeds the export

order value, the difference being made good by the government by way of incentives or duty draw back after

shipment.

EXPORT FINANCE GUARANTEE (EFG)

Where the banks extend advances at the post shipment stage to their exporter clients against export incentives

receivable from the Government of India and need cover against non-payment in case of insolvency or default of

the exporter, they can seek protection under the scheme.

Medium and Long-Term Exports:

i) Policy Schemes

SPECIFICT CONTRACT /SHIPMENTS POLICY

For covering supply contracts and Turnkey Projects, Specific Contract / Shipments Policy can be taken. This Policy

can be for covering only political risks or for covering comprehensive risks i.e. both commercial and political risks.

CONSTRUCTION WORKS POLICY

For covering construction contract, a Construction Works policy can be obtained. This policy can be for either

Political Risks alone or for Comprehensive Risks. The Comprehensive Risks Policy provides protection against

commercial risks such as Insolvency of Buyer, protracted default, non-acceptance of goods shipped in addition to

covering political risk of war, civil war, exchange transfer delay etc. The political risk policy on the other hand

provides protection against political risk policy.

SPECIFIC SERVICES CONTRACT POLICY

For covering services contract, which involves only technical and / or professional services, a Services Policy can be

obtained. This also can be either for political or comprehensive risks.

ii) Guarantee Schemes

Guarantees for Funded Facilities:

[a] Packing Credit [b] Post Shipment [c] Overdraft [d] Rupee Loan

Guarantees for Non – Funded facilities (Counter Guarantees to bank guarantees):

[a] Bid Bond [b] Advance payment [c] Due Performance [d] Retention Money [e] Overseas Borrowings Special Schemes:

Buyer's Credit / Lines of Credit cover:

Financial Institutions in India extend Buyer's Credit / Lines of Credit to overseas buyers / institutions to facilitate

export of goods & services from India. Institutions like Exim Bank often seek ECGC cover for Buyers Credit / Lines

of Credit cover. Buyers Credit / Lines of Credit cover can be obtained either for covering political risks or for

comprehensive risks.

Overseas Investment Insurance (OII) cover:

OII provides cover for the investments made by Indian Corporate abroad in Joint Ventures or their wholly owned

subsidiary (WOS) either in the form of equity or untied loans.

Exchange fluctuation Risk cover scheme:

The Scheme is operated by the Corporation for and on behalf of the Government of India protecting the exporters

of project exports and supply contracts involving deferred payment terms against the exchange fluctuation risks

between the currency of invoice and Indian rupees.

The scheme is available for select convertible currencies.

Transfer Guarantee:

At times banks in India are required to add their confirmation to Letters Credit (LC) opened by banks in buyer‘s

country. The confirming bank can avail protection against non payment by the LC opening bank due to

default/insolvency of the LC opening bank or political risk in the LC opening bank‘s country under the scheme.

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 the above policy.

For complete details of the schemes please visit ECGC website www.ecgcindia.in

EXPORT-IMPORT BANK OF INDIA (EXIM BANK)

Export-Import Bank of India is the export finance institution, set up in 1982 under the Export-Import Bank of

India Act 1981. Government of India launched the institution with a mandate to not just enhance exports from

India, but also to integrate the country’s foreign trade and investment with the overall economic growth. Exim Bank

of India has been both a catalyst and a key player in the promotion of cross border trade and investment.

The bank is working on the following programmes:

1. Overseas Investment Finance

2. Project Finance

3. Line of Credit

4. Corporate Banking

5. Buyer's Credit Under NEIA

OVERSEAS INVESTMENT FINANCE PROGRAMME:

Exim Bank encourages Indian companies to invest abroad for setting up manufacturing units and for acquiring

overseas companies to get access to the foreign market, technology, raw material, brand, IPR etc. For financing

such overseas investments, Exim Bank provides:

a) Term loans to Indian companies upto 80% of their equity investment in overseas JV/ WOS.

b) Term loans to Indian companies towards upto 80% of loan extended by them to the overseas JV/ WOS.

c) Term loans to overseas JV/ WOS towards part financing

(i) capital expenditure towards acquisition of assets,

(ii) working capital,

(iii) equity investment in another company,

(iv) acquisition of brands/ patents/ rights/ other IPR,

(v) acquisition of another company,

(vi) any other activity that would otherwise be eligible for finance from Exim Bank had it been an Indian

entity.

d) Guarantee facility to the overseas JV/ WOS for raising term loan/ working capital.

PROJECT EXPORT:

Exim Bank extends funded and non-funded facilities for overseas turnkey projects, civil construction contracts,

technical and consultancy service contracts as well as supplies.

LINE OF CREDIT:

A Line of Credit (LOC) is a financing mechanism through which Exim Bank extends support for export of projects,

equipment, goods and services from India. Exim Bank extends LOCs on its own and also at the behest and with the

support of Government of India. Exim Bank extends Lines of Credit to:

a) Foreign Governments or their nominated agencies such as central banks, state owned commercial banks

and para-statal organizations;

b) National or regional development banks;

c) Overseas financial institutions;

d) Commercial banks abroad;

e) Other suitable overseas entities.

The above mentioned recipients of LOCs act as intermediaries and on lend to overseas buyers for import of

Indian equipment, goods and services. LOC is a financing mechanism that provides a safe mode of non-recourse

financing option to Indian exporters to enter new export markets or expand business in existing export markets

without any payment risk from the overseas importers.

CORPORATE BANKING:

The Bank offers a number of financing programmes for Export Oriented Units (EOUs), importers and for companies

making overseas investments. The financing programmes cater to the term loan requirements of Indian exporters

for financing their new project, expansion, modernization, purchase of equipment, R&D, overseas investments and

also the working capital requirements.

BUYER'S CREDIT:

Overseas buyers/importers can avail this facility for import of eligible goods and services from India on deferred

payment terms. The facility enables exporters/contractors to expand abroad and into non-traditional markets. It

also enables exporters/contractors to be competitive when bidding or negotiating for overseas jobs.

For complete details please visit EXIM Bank website www.eximbankindia.in .