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NIRVIK scheme to provide high insurance cover for exporters
Export Credit Guarantee Corporation of India (ECGC) has introduced ‘NIRVIK’ scheme to ease the lending process and enhance loan availability for exporters. Under the new ‘NIRVIK’ scheme, which is also called the Export Credit Insurance Scheme (ECIS), the insurance cover guaranteed will cover up to 90 percent of the principal and interest. The insurance cover will include both pre and post-shipment credit. The Export Credit Guarantee Corporation of India (ECGC) currently provides credit guarantee of up to 60 percent loss.
Objective:
- The main aim behind introducing the scheme was to enhance accessibility and affordability of credit for exporters.
- Its objective was to promote exports from the country by providing credit risk insurance and related services for exports.
Benefits of NIRVIK Scheme
- The decision will help make Indian exports competitive and make ECGC procedures exporter friendly, benefiting MSME exporters with a new scheme for reimbursing taxes, reduced insurance cost and ease of doing business.
- The insurance cover is expected to bring down the cost of credit due to capital relief, less provision requirement and liquidity due to quick settlement of claims and will ensure timely and adequate working capital to the export sector.
- Ministry of Commerce was already running a scheme “Export Credit Insurance Scheme” to provide credit risk insurance through ECGC Ltd at cheaper premium. Under this scheme it was covering a loss of 60% of Principal and Interest. But in the newly launched scheme “NIRVIK” this coverage has been increased to 90% of the Principal and Interest.
- So, if the exporter took Rs. 100 cr loan and he is not able to receive payment because of any aforementioned reasons. then ECGC will pay 90 crore and exporter will have to pay Rs. 10 crore.
- It was also proposed to subsidise the premium under the Scheme that has to be paid by exporters of certain key sectors.
ECGC:
- The Export Credit Guarantee Corporation of India (ECGC) is a fully government-owned company that was established in 1957 to promote exports by providing credit insurance services.
- The ECGC provides Export Credit Insurance to Banks (ECIB) to protect the banks from losses on account of export credit at the Pre and Post-Shipment stage given to exporters due to the risks of insolvency or protracted default of the exporter borrower.
- ECGC Ltd is wholly owned by the Ministry of Commerce and Industry. After the introduction of insurance covers to banks during the period 1962-64, the name was changed to Export Credit & Guarantee Corporation Ltd in 1964. It was changed to ECGC Ltd in August 2014.