Ecgc To Foray Into Factoring

Export Credit Guarantee Corporation of India (ECGC) is set to enter the factoring business, its chairman and managing director P M A Hakeem said.

"We have initiated dialogue with several banks involved in export financing and will commence the business by April 2002," he said.

Banks will undertake discounting and ECGC will be take charge of the factoring. ECGC has a collaboration with Theofinance of UK, which specialises in invoice chasing mechanism.

With the opening up of the sector, ECGC is gearing up to face competition and has introduced a new specific shipment insurance option for exporters. Under the scheme, exporters can insure their specific export consignments instead of compulsorily covering export for the whole year.

ECGC is also exploring possibilities of launching domestic credit insurance and marine freight insurance. It has appointed National Insurance Academy for looking into the possibilities of diversification, in the post Insurance Regulatory Development Authority regime.

ECGC is also in the process of tying up with legal firms specialising in debt recovery.

Meanwhile, Hakeem said ECGC had effected several changes for faster settlement of claims and delegation of more power to field officers. This has allowed the company to take care of 90 per cent of the cases on the field level and thus reduce delays.

The company has also issued a comprehensive set of in-house guidelines that will allow officers to speed up claim disbursals by overlooking factors that eat up time. "Though this will put pressure on the claim premium ratio, we are in a comfortable position to manage it," Hakeem said.

ECGC has also fixed a 50-day time limit for disbursal of claims. It is targeting disbursal of 15 per cent cases in less than a couple of weeks. It has also decided to take a lenient view on disbursal of cases below Rs 25 lakh while those "over Rs 25 lakh are being handled with care," said Hakeem.