ECGC reports record claim payouts at Rs 713 cr

Hit by an economic crisis in Europe and political instability in Libya, Egypt, Sudan and Iraq, the Export Credit Guarantee Corporation (ECGC), reported record claims for the financial year ended March 31, 2012.

The state-owned company paid out 728 claims, amounting to Rs 713 crore during 2011-12, the highest since starting operations in 1957. During 2010-11, the total claims were Rs 621 crore, it said.

However, in the same period, net profit rose nearly threefold to Rs 225 crore, from Rs 85.7 crore in the corresponding period a year before. During 2011-12, it also collected Rs 1,005 crore by writing policies, up 13.5 per cent from Rs 885 crore in 2010-11.

 

“Last year’s claims have been higher because of the current global financial situation but recovery, too, has increased to Rs 169 crore against Rs 137 crore. This year we want to grow our business by 10 per cent,” said N Shankar, chairman and managing director, addressing journalists on Wednesday.

The operations have two components. One is direct insurance cover to exporters, which covers risk on the foreign buyer. The other is the cover to banks in India which provides credit to exporters.

With the increase in claims, the company is planning to introduce a rating system or scorecard for foreign buyers of Indian goods. “Since we are taking the risk of buyers directly, we need to have a better rating system of overseas buyers. So, we are introducing a scorecard system, based on which we will prescribe individual exposure limit for exporters. It will be devised on the basis of quantitative and qualitative information, which has become crucial for exporters and their insurers in view of the difficult financial situation in several countries,” Shankar said.

Exports to Iran
ECGC is also set to give guarantees and write business for Iran-bound exporters, affected due to US-led sanctions. “Cover for shipments to Iran is available for bills invoiced in the rupee, as accounts are frozen due to sanctions if bills are invoiced in the dollar, euro and yen,” Shankar added.

The transaction will be done though public sector lender UCO Bank, where four Iranian banks have opened a Vostro account.

This is an account held by the domestic bank in its home country for foreign banks. “Under the scheme, all the transaction and payments will be made in rupee terms,” he said.