MANU/PIBU/1423/2019
Department/Board : PIB
Date : 16.09.2019
Commerce Ministry through ECGC raises Insurance cover for Banks up to 90% for Working Capital Loans
Enhanced cover to ensure Forex and Rupee Export Credit Stimulus package to enhance volume of Export Credit Lending
Union Minister of Commerce & Industry and Railways, Piyush Goyal informed about the details of the Export Credit Insurance Scheme (ECIS) in New Delhi today at a press conference. Minister of State for Commerce & Industry, Hardeep Singh Puri was also present. The scheme was announced by the Finance Minister, Nirmala Sitharaman, as part of measures to boost exports, on 14th September 2019 in New Delhi.
Due to the global slowdown and rising NPAs, banks are in stress and therefore require additional support. Finance Ministry has taken steps towards merger of Banks and has infused additional capital to the banks. In order to facilitate banks further Ministry of Commerce & Industry has enhanced Insurance cover for Banks up to 90% for the working capital loans and moderation in premium incidence for the MSME sector.
Enhanced cover will ensure that Foreign and Rupee export credit interest rates will be below 4% and 8% respectively for exporters.
The stimulus package will catalyze Banks to enhance volume of export credit lending particularly to the MSME Sector with optimal pricing due to capital and risk optimization.
The existing covers issued by Export Credit Guarantee Corporation of India (ECGC) will continue for the existing customer banks and similar covers will also be made available to all other banks. All standard accounts covered under ECGC as on the date of transition, shall be eligible for cover under the ECIS.
The scope of cover has been enlarged to cover not only the principal outstanding but also for the unpaid Interest (for a maximum of two quarters or the NPA date, whichever is earlier).
The cover percentage has been enhanced to 90% from the present average of 60% for both Principal and Interest.
A single cover document for ECIS shall be issued covering both the Pre-shipment and Post-shipment advances unlike the present two different documents being issued by ECGC.
The scheme envisages simplified procedure for settlement of claim and also for provisional payment up to 50% within 30 days on production of proof of end-use of the advances in defaul........