Government approves Rs. 4,400 crore investment in ECGC Ltd. in 5 years to provide support to exporters as well as banks

What is the News?

The government of India has approved capital infusion of ₹4,400 crores to ECGC Ltd. (formerly known as Export Credit Guarantee Corporation of India Ltd.) over a period of five years, i.e. from FY 2021-2022 to FY 2025- 2026.

About ECGC Ltd. (formerly known as Export Credit Guarantee Corporation of India Ltd.)

ECGC was established by the Government of India under the Companies Act in 1957.

Aim: To promote exports by providing credit insurance services to exporters against non-payment risks by the overseas buyers due to commercial and political reasons. It also provides insurance covers to banks against risks in export credit lending to the exporter borrowers

Nodal Ministry: It functions under the administrative control of the Ministry of Commerce & Industry and is managed by a Board of Directors comprising representatives of the Government, Reserve Bank of India, banking, and insurance and exporting community.

Performance of ECGC

ECGC is a market leader with around 85% market share in the export credit insurance market in India

ECGC insures around 50% of total export credit disbursement by banks, covering 22 banks (12 Public Sector Banks and 10 Private Sector Banks).

How will the capital infusion help ECGC?

ECGC plays a wider role in supporting exports from labour-intensive sectors and encouraging bank lending to enterprises of small exporters thereby leading to their revival. 

Capital infusion in ECGC will enable it to expand its coverage to export-oriented industries, particularly labour-intensive sectors.

Source:  This post is based on the article “Government approves Rs. 4,400 crore investment in ECGC Ltd” published in PIB on 30th Sep 2021.