Credit insurance provider ECGC modifies country risk rating for Sri Lanka

The Mumbai-based company ECGC on Wednesday made changes to its underwriting policy for all transactions related to the outbound shipments to Sri Lanka.

State-owned credit insurance provider ECGC Ltd has now put India’s crisis-ridden neighbouring country–Sri Lanka in the restricted cover category-I (RCC-I).

Countries are put into the restricted cover category when political or economic conditions of a country start deteriorating, increasing the likelihood of payment delays or defaults.

The Mumbai-based company on Wednesday made changes to its underwriting policy for all transactions related to the outbound shipments to Sri Lanka. However, the premium rates for the shipments insured under the insurance covers will remain unchanged.

“After carrying out a review of the rating of Sri Lanka in view of prevailing situations, ECGC, which offers credit guarantee, has changed the cover category from Open Cover to Restricted Cover category – RCC 1. This category of export credit guarantee offers revolving limits and is normally valid for a year after being approved on a case-to-case basis,” an official statement said. This will be implemented from April 7.

Steps taken by ECGC will help customers improve payment realisation prospects from buyers in Sri Lanka.

India exported goods worth $4.48 billion during April-January (2021-22), as compared to $3.49 billion in FY21. Sri Lanka is India’s 38th largest trading partner, with a trade balance in favour of India. Trade surplus was to the tune of $3.6 billion during the first ten months of 2021-22, according to official statistics.

With Sri Lanka going through a severe economic crisis, India has already offered a line of credit to help the country meet its immediate needs.