The Export Credit Guarantee Corporation Limited (ECGC), under the Government of India, on Thursday settled a single insurance claim of Rs. 20.48 crore to Punjab National Bank (PNB) against the loss it suffered in extending packing credit to a garment exporter.
The settlement was made under the Export Credit Insurance to Banks (ECIB) scheme of the ECGC.
“This is the highest single claim payment disbursed under the ECIB scheme in Tirupur since the branch here was opened in 1999,” A.R.Muraleedharan, assistant general manager of ECGC, told The Hindu .
Mr. Muraleedharan pointed out that the ECIB scheme gave the banks a guarantee that the ECGC would make good a ‘major portion’ of the banks’ losses in the event of an exporter failing to discharge his liabilities to the bank such as non-repayment of packing credits due to various reasons.
“In this scheme, the respective banks are required to be the co-insurer to the extent of the remaining loss, ie for the portion which is not covered by the ECIB scheme,” he said.
The Tirupur branch of ECGC had settled claims worth Rs. 46 crore under various credit insurance schemes during the 2012-13 fiscal.
“Of the total settlement, Rs. 36 crore were made under the ECIB scheme and the remaining to the garment exporters against the losses they incurred due to non-payment of bills and non-acceptance of goods by the foreign buyers,” Mr. Muraleedharan said.
He pointed out that during the last three years, majority of the Indian exporters faced losses primarily owing to factors such as European economic crisis and strife in Middle East and North African countries.
“In such circumstances, obtaining suitable credit insurance will come in handy to avoid huge financial risks,”