Ecgc May Liberalise Underwriting Norms

If such a decision comes through, it would be a departure from the trend of granting guarantee only against letters of credit.

At present, Russia and other CIS countries import 80 per cent of Indian goods under the debt repayment scheme. The remaining 20 per cent is exported against LoCs.

But with a fewer banks opting for LoCs, the export credit agency proposes to modify the underwriting policy. This proposition, however, will need close scrutiny as these countries, strapped for foreign exchange, are perceived to have higher risks.

Corporate sources said several reputed export houses had approached the corporation for guarantees against deposit of acceptance (DA), which is on credit terms. This would mean staving off competition from other countries which are allowed exports against 180 days credit.

 

ECGC currently provides cover against LoCs to high-risk countries like Russia and CIS countries, Iraq and a few African countries, with an adverse balance of payments.

The need to bring about competitive cover other than LoCs has become essential as export conditions in Russia are tough. ECGC has identified about 25 banks that are willing to open LoCs.

It provides restricted cover to 56 countries and every contract is reviewed thoroughly.

In order to optimise credit insurance, ECGC along with other banks, have worked out a strategy to get information on overseas buyers and credit rating of exporters.

Deepak Chatterjee, acting ECGC chairman, is expected to meet officials from tea industry to discuss problems in exporting.

Tea is one of the major commodities exported to Russia. About 64 per cent is routed through Calcutta, 20 per cent from Cochin, 12 per cent Mumbai, two per cent Delhi and one per cent each from Bangalore and Hyderabad.

Tea exports from India have slid from 27 to 14 per cent in the last 20 years. In its bid to regain a 25 per cent share in the world market, the export credit agency, with banks' support, could facilitate adequate finance to exporters.