EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED WELCOME

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED WELCOME TO A PRESENTATION ON INSURANCE & RISK MANAGEMENT and ROLE OF ECGC You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED ECGC Mission To support the Indian export industry by providing cost effective insurance and trade related services to meet the needs of the Indian exporters You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED OBJECTIVE of ECGC To PROMOTE EXPORTS Mainly by • Protecting Exporters against COMMERCIAL & POLITICAL RISKS In realising export proceeds • Protecting Banks against RISK OF DEFAULT in export credit • Protecting Investors against POLITICAL RISKS in Shareholders’ equity and loan In overseas investments You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED ECGC Fact sheet • Established in 1957 • Fully owned by GOI • Under administrative control of MOCI • Capital Base • Highest ICRA rating of IAAA • 5 Regional Offices and 51 Branch Offices • All Branches ISO 9001: 2000 certified • Member of Berne Union • MOU with GOI You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Key Performance Highlights Financial Years ( Audited Data) Sr. No. Description 1 Gross Premium income Rs. 885. 47 cr. 1004. 80 cr. 2 Claims Paid Rs. 620. 53 cr. 712. 96 cr. 3 Recoveries Received Rs. 136. 07 cr. 168. 69 cr. 2010 -11 You focus on exports. We cover therisks. 2011 -12

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED What is Risk? Uncertainty about future outcome due to : Unexpected occurrence of events – Uncontrollable factors – Lack of Information You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Risk Perceptions • • • Industry risk Business risk Risk of contract frustration Risk of physical damage Credit risk Country Risk You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED What is Credit Risk • Definition: The potential that a debtor will fail to meet its payment obligations in accordance with agreed terms. • Export credit risk: a) Buyer related problems b) Country related You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Risk Management Analysis, acceptance or mitigation • Risk avoidance • Risk Transfer • Risk Sharing • Risk retention You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED RISK MANAGEMENT IN EXPORTS Goods Loss or Damage Marine Insurance Receivables Exchange Risk Hedging by Authorized Dealers You focus on exports. We cover therisks. PAYMENT RISK CREDIT INSURANCE

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Payment Risks POLITICAL RISK COUNTRY COMMERCIAL RISK BUYER LC / NON – LC You focus on exports. We cover therisks. BANK LC

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Role of ECGC as an Export Credit Insurer • Providing export credit insurance covers to Exporters against loss in export of goods & services under ST & MLT (POLICY Scheme) • Providing export credit insurance covers to Banks & FI’s to enable exporters obtain better facilities from them (ECIB) (formerly known as Guarantees) You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Risks covered -Political War, Civil war, Internal disturbances Diversion of voyage due to war exchange transfer blockages /delay New import restrictions, cancellation of import licence, etc. You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Risks covered- Commercial Insolvency of buyer/bank Non acceptance of exported shipment Default of buyer/bank You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Risks NOT considered Credit risk • Non fulfillment of contractual obligations by exporter including quality dispute. • Default or insolvency or any omission /commission of any agent of exporter/ buyer • Failure of buyer to obtain necessary approvals for imports • Causes inherent in nature of goods • Exchange fluctuation risks • Physical loss/damage to goods You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Principles of Credit Insurance • Good Faith • Co-insurance • Spread of risks You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Buyer & Country Underwriting • The 2 pillars of Export Credit Insurance : Country Underwriting Buyer Underwriting that assesses buyer risks and Limit fixed on Buyer You focus on exports. We cover therisks. that assesses country risks Country classification

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Products offered to Exporters Declaration Based Policies Whole Turnover Specific transaction 1) Standard (SCR) Policy 2) Small Exporters Policy 3) Export Turnover Policy 1) Specific Shipment Policy 2) Specific Buyer Policy 3) Transfer Guarantee (for Banks) You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Products offered to Exporters Exposure Based Policies 1) Single Buyer Exposure Policy 2) Multi buyer Exposure Policy 3) SME Policy You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Products offered to Exporters Consignment Based Policies 1) Consignment Export Policy 2) Global Entity Policy You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Products offered to Exporters Covers for IT/ITES industry 1) Software project exports policy 2) IT enabled (single customer) policy 3) IT enabled (multi customer) policy You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Premium Structure Basis • Country Grouping - 7 fold (237 countries) ( A 1, A 2, B 1, B 2, …. . D)- Higher the country group, lower the premum rates • Terms of Payment- More superior the payment terms, lower the premium rate • Specific approval required for Restricted Cover countries You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Shipments (Comprehensive Risks) Policy • Whole Turnover principle • Selective options for exclusion. LC/ Associates/ Consignments • 90% cover • Minimum premium of Rs. 10, 000/ • Policy Period - 2 years • Buyer wise Credit limit • Discretionary limit • Monthly declarations with premium • No Claim Bonus – yearly 5%; max 50% You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Small Exporters Policy • • Turnover not exceeding Rs. 50 Lakhs p. a. Minimum Premium Rs. 2000/Policy Period - one year Higher percentage of cover. Commercial risks 95%; Political risks 100% • No Claim bonus • Quarterly Declarations You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Specific Shipment Policy (SSP) • • • Covering one shipment or One contract Processing fee of Rs. 1000/80% cover Premium higher than standard premium rates Upfront premium before issue of Policy Commercial / Political risks and L/C comprehensive risks covered • Submission of Shipment Statement and realisation report You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED SME POLICY • For exporters with Export Turnover not exceeding Rs 10 Lakhs and registered under MSME Act, 2006 • Cover available upto Rs 10 lakhs. • Annual premium Rs 5, 000 and processing fee of Rs 1, 000 • 90% cover • Maximum claim payable is Rs 3 lakhs on any buyer • No requirement of monthly declaration of shipments You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Benefits For Exporters • Protection for account receivable • Reduction in Bad debt • Improvement in quality of financial planning • Enhancement in risk taking capacity • Easy access to bank finance on liberal terms You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED ECIB’S TO BANKS • Contract of insurance between bank & ECGC • Protects banks against losses in export credit due to - Insolvency of exporter - Protracted default of exporter You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED Benefits For Banks • Protection For Pecuniary Liabilities Against Funded and Non Funded Credit Facilities To Exporters • Enables To Waive Collateral Securities • Lesser Capital Deployment requirement. You focus on exports. We cover therisks.

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LIMITED In the Service of Exporters and Banks since 1957 Thank You Please visit us at: www. ecgc. in : kolkata@ecgc. in; ero@ecgc. in You focus on exports. We cover therisks.