New Export Credit Insurance Scheme, NIRVIK

(Ministry of Commerce & Industry)

WHAT

Ministry of Commerce & Industry through export Credit Guarantee Corporation (ECGC) has introduced a new Export Credit Insurance Scheme (ECIS) called NIRVIK.

• NIRVIK will enhance the availability of loans and ease the lending process.

 

SIGNIFICANCE

• The scheme is announced to boost the exports.
• The gems, jewellery and diamond (GJD) sector borrowers with limit of more than Rs. 80 crore will have a higher premium rate as compared to non-GJD sector borrowers of this category due to the higher loss ratio. The ECGC cover provides additional comfort to banks as the credit rating of the borrower is enhanced to AA rated account.
• The enhanced cover will ensure that Foreign and Rupee export credit interest rates will be below 4%and 8% respectively for exporters.
• Under ECIS, insurance cover percentage has also been enhanced to 90% from the present average of 60% for both Principal and Interest.

 

EXPORT CREDIT INSURANCE SCHEME (ECIS)

• The scheme protects an exporter of products and services against the risk of non-payment by a foreign buyer.
• It generally covers commercial risks, like, insolvency of the buyer, bankruptcy, or protracted defaults/slow payment and certain political risks (such as terrorism, riots, war, and revolution) that could result in non-payment.
• ECI also covers currency inconvertibility, expropriation, and changes in import or export regulations.
• The scheme does not cover physical loss or damage to the goods shipped to the buyer, or any of the risks for which coverage is available through marine, fire, casualty or other forms of insurance.

 

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED

• It is wholly owned by the central government and was set up in 1957.
• Its objective is to promote exports from the country by providing credit risk insurance and related services for exports.

 

Source: PIB

 

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