Export Credit Guarantee Corporation (ECGC) of India has launched Niryat Rin Vikas Yojana (NIRVIK). Under NIRVIK Scheme, central govt. will provide easy loans to exporters and will cover 90% of principal amount & interest rates. For losses to bank account of exporters, compensation would be provided to banks by ECGC.
Central govt. will also reduce insurance premium rates to 0.6% from small exporters. This would be applicable for all exporters having an outstanding limit of less than Rs. 80 crore.
Finance Minister Nirmala Sitharaman has announced to launch NIRVIK Scheme in the latest Union Budget 2020-2021 present on 1 February.
Niryat Rin Vikas Yojana – NIRVIK Scheme
Finance Minister has announced the launch of new scheme named NIRVIK – Niryat Rin Vikas Yojana by ECGC. Under NIRVIK Scheme, govt. will ensure easy availability of loans for exporters & disbursal of loans would be simpler. Ministry of Commerce and Ministry of Finance has discussed this NIRVIK scheme with all export bodies. All those exporters who comes under NIRVIK scheme, exporters will get 90% coverage on both principal amount & interest through insurance.
In case of loss to any bank account, 90% of interest & principle amount would be refunded back to banks through ECGC. The lending banks will get 50% within 30 days from the date of lodge of loss claim. All the small borrowers who had an outstanding export credit less than Rs. 80 crore as on 31 March 2018 will now have to pay 0.60% premium which is less than an existing premium of 0.72%.
Such exporters are going to be divided into categories such as non-gold, jewellery and diamond. This is to be done because insurance claim for gold, jewellery and diamond players are high which impacts lending ability of banks. For all the bank accounts having limits below Rs. 80 crore, the premium rates are going to be moderated to 0.60 p.a. For all those whose limit exceeds Rs. 80 crore, the premium rates would be 0.72% for same enhanced cover.
Export Credit Insurance Scheme (ECIS)
Export Credit Insurance Scheme (ECIS) has ensured simplified procedure to settle claims & provisional payment upto 50% within 30 days. For this, exporters will have to produce proof of end use of advances in default by insured bank. ECIS support is going to be in-force for period of 5 years and finally, standard ECGC covers would be made available for banks with regular features.
ECGC also waived off inspection on claims upto Rs. 10 crore & this has been approved by ECGC board. Now the inspection of bank documents & records by ECGC officials will be compulsory for losses of more than Rs. 10 crore. At present, the limit for settlement of claims is Rs. l crore. Scope of coverage is also enlarged to include principal outstanding along with unpaid interest for maximum of 2 quarters or the NPA date.
This proposed insurance cover is going to bring cost of credit due to capital relief and less provision requirement. Liquidity is another important factor for quick settlement of claims to ensure timely & sufficient working capital to export sector.
Even after getting insurance cover of 90%, small exporters will also get loans at competitive rate at about 7.6%. With this move, there will be 30% growth in export credit and 20% growth every year. ECGC is going to cover Rs. 3 lakh crore of loans. State Bank of India & ECGC has developed NIRVIK scheme concept for foreign exchange credit. In this scheme, SBI will provide dollar denominated funds to all banks for exporters which faces issues in raising funds.