ECGC may get nod to cover domestic risks

The Export Credit Guarantee Corporation of India Ltd (ECGC) is set to provide credit insurance cover to companies in the domestic sector.

"The current mandate allow us to provide credit insurance cover only to activities related to exports. The government is likely to give us the permission to provide credit insurance to business activities, which are focused on the domestic market. Once we get the permission, the new scheme could be launched by early November this year," said A V Muralidharan, chairman and managing director, ECGC.

Initially, the scheme will be open to exporters, who have business interests in the domestic market. "In the next two years, we plan to increase the insurance coverage to non-exporting community also," added Muralidharan.

The new scheme will provide insurance cover to small and medium enterprises and businesses from manufacturing and agriculture sectors. Moreover, it is expected to add at least Rs 50 crore in the corporation's gross premium earnings, which stood at Rs 617.66 crore in 2006-07. The additional business will result in an additional revenues.

However, the corporation expects that its bottom line will be hit in the 2007-08 fiscal because of factors such as the recent reduction of premium by up to 10 per cent to cushion losses of exporters, effected by the appreciating rupee. " The reduction in premium will have an impact of at least Rs 50-60 crore for the corporation," said Muralidharan.

In addition to the new scheme, the corporation is planning to take measures for increasing users of its policies. "As of now, nearly 15,000 exporters use our policies to cover risks. We want to increase the number by a minimum, 5 per cent. This will be done by engaging various export promotion councils as well as brokerage firms as intermediaries for selling our products," said Muralidharan.