The Union Cabinet that was headed by Prime Minister Narendra Modi on Wednesday approved the capital infusion of Rs 4,400 crore into the state-owned Export Credit Guarantee Corporation (ECGC) and its listing through an initial public offering (IPO). During the meeting, it was decided that the government will be injecting Rs 4,400 crore in the ECGC over a period of five years, beginning in 2021-22, according to a statement by Union Minister Piyush Goyal. This will enable banks to give additional loans of Rs 88,000 crore and ECGC will give cover on that said, Goyal.
This move, as per the government, will also help in the creation of some 59 lakh new jobs including 2.5 lakh jobs in the formal sector. Goyal went on to say that Rs 500 crore would be infused immediately. It should also be noted that the listing of the ECGC is likely to happen somewhere next year. The minister also informed that the exports have so far totalled around Rs 185 billion till September 21, 2021, in the current fiscal.
The cabinet had also given the green light for the infusion of another Rs 1,650 crore into the National Export Insurance Account scheme, said the commerce minister during the event.
The ECGC is a company that is wholly owned by the Government of India and was set up in the year 1957 with the objective of promoting exports in the country by providing Credit Risk Insurance and other related services necessary in the export business. In an official capacity, the company functions under the administrative control of the Ministry of Commerce and Industry. It is managed by a Board of Directors comprising representatives of the Government, Reserve Bank of India, banking, and insurance and exporting community.
Over the years ECGC it has designed different credit risk insurance products that are tailor-made for the Indian exporters as well as the commercial banks which are extending export credit. Basically, it is an export-promotion organisation which is aiming to improve the competitiveness of the Indian exporters by way of the aforementioned credit risk covers. ECGC claims to keep the premium rates at the optimal level.
Aside from this, the company also offers Export Credit Insurance to banks and other financial institutions, which enables exporters to avail themselves of better facilities from them. The company also provides overseas investment insurance to Indian companies which are investing in joint ventures abroad in the form of equity or loan.
Company Objectives: As per Company Website
1. To encourage and facilitate the globalisation of India’s trade.
2. To assist Indian exporters in managing their credit risks by providing timely information on the worthiness of the buyers, bankers and the countries.
3. To protect the Indian exporters against unforeseen losses, which may arise due to failure of the buyer, bank or problems faced by the country of the buyer by providing cost-effective credit insurance covers in the form of Policy, Factoring and Investment Insurance Services comparable to similar covers available to exporters in other countries.
4. To facilitate the availability of adequate bank finance to the Indian exporters by providing surety insurance covers for bankers at competitive rates.
5. To achieve improved performance in terms of profitability, financial and operational efficiency indicators and achieve optimum return on investment.
6. To develop world-class expertise in credit insurance among employees and ensure continuous innovation and achieve the highest customer satisfaction by delivering top quality service.
7. To educate the customers by continuous publicity and effective marketing.
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