Nirvik Scheme

News:The Export Credit Guarantee Corporation of India(ECGC) has said that the Nirvik scheme announced by the Union Government would give a fillip to export lending and insurance cover for export credit.

Facts:

About the scheme:

• The scheme aims to ease the lending process and enhance loan availability for exporters.
• Under the scheme,the insurance cover guaranteed will cover up to 90% of the principal and interest.The insurance cover will include both pre and post-shipment credit.
• The enhanced cover will ensure that Foreign and Rupee export credit interest rates will be below 4% and 8% respectively for exporters.
• The gems, jewellery and diamond(GJD) sector borrowers with a limit of over Rs 80 crore will have a higher premium rate in comparison to the non-GJD sector borrowers of this category due to the higher loss ratio.
• The scheme also mandates inspection of bank documents and records by ECGC officials for losses exceeding Rs.10 crore as against the present Rs 1 crore.

Significance of the scheme:

• This scheme will help make Indian exports competitive and make ECGC procedures exporter friendly, benefiting MSME exporters.
• The insurance cover is also expected to bring down the cost of credit due to capital relief, less provision requirement and liquidity due to quick settlement of claims.

Additional information:

Export Credit Guarantee Corporation(ECGC):

• ECGC is a premier export credit agency of the Government of India to provide Export Credit Insurance Services to facilitate exports from the country.It was founded in 1957.It is headquartered at Mumbai.
• The ECGC offers credit insurance schemes to exporters to protect them against losses due to non-payment of export dues by overseas buyers due to political or commercial risks.