ECGC Ltd., the government of India enterprise that provides export credit insurance, is in the process of approaching the Reserve Bank of India (RBI) to authorise it to deal with foreign currency for the benefit of exporters.
“We are trying various methods to help reduce the cost for exporters. We are applying to the RBI so that they can give us authorisation to deal with foreign currency and we will provide funds in foreign currency and factoring will be done in the foreign currency in which bills are drawn,” M. Senthilnathan, CMD, ECGC said on Thursday.
“So that we can charge interest as applicable in the western markets and some margin. Once permission is given to ECGC as authorised dealer of factoring in foreign currency, may be, we will do more factoring. Currently only 3 to 4 exporters are doing factoring,” he added.
He was speaking at a webinar organised by ECGC and The Hindu on “The importance of Export Credit Insurance for MSME exporters in post-COVID trade”.
Stating that ECGC had a developmental mandate for promotion of exports, he said the whole approach of the institution has been market-oriented and not for profit.
He urged exporters to grow their international business by giving credit to buyers and take adequate insurance.
A. Sakthivel, president, Federation of Indian Export Organisations (FIEO) said every exporter must take credit insurance.. He urged the government and the ECGC to devise special credit insurance products for MSMEs that form a large chunk of the exporter count.
He also said the ECGC should consider setting a fixed time limit for settlement of claims and go online for the convenience of exporters.
Panellist Ramesh Rajah, president, (Coffee Exporters Association) & chairman of Ramesh Exports Pvt. Ltd. urged the ECGC to come out with commodity-specific credit insurance covers to reduce the cost for coffee exporters.
“If ECGC is increasing the rates, they should do a commodity-wise analysis. They should come out with differentiated risk premium on different commodities based on risk factors,” he said.
“Why should I pay high premium [to offset the losses caused in commodities that have high risk]? MSMEs should be given a helping hand,” he said “Raw materials, capital and logistics are the major costs for exporters. All costs are going up and risks are increasing,” he added.