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Home  » Money  » Insurance » ECGC - Export Credit Insurance For Banks Surety Cover
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ECGC - Export Credit Insurance For Banks Surety Cover

Objectives

Exporters are often called upon to execute bonds duly guaranteed by an Indian bank at various stages of export business. An exporter who desire to quote for a foreign tender may have to furnish a bank guarantee for the bid bond. If he wins the contract, he may have to furnish bank guarantee to foreign buyers to ensure due performance or against advance payment or in lieu of retention money. Further, for obtaining import licenses for raw materials or capital goods, exporters may have to execute an undertaking to export goods of a specified value within a stipulated time, duly supported by bank guarantees. Bank guarantees are also furnished by exporters to the DGFT, Customs, Central Excise or Sales tax authorities for the purpose of clearing goods without payment of duty or for exemption from tax for goods procured for export. Exporters also furnish Guarantees in support of the export obligations to Export Promotion Councils (EPCs), Commodity Boards (CBs), The State Trading Corporation of India (SCI), The Minerals and Metals Trading Corporation of India (MMTC) or recognised Export Houses. An export proposition may be frustrated if the bank is unwilling to issue the Guarantee. The Export credit Insurance for banks (Surety Cover) is aimed at meeting such situations. The ECIB (SC) which is in the nature of indemnity to the bank is issued to protect the bank against losses that it may suffer on account of guarantees given by it on behalf of exporters. This protection is intended to encourage banks to give guarantees on a liberal basis for export purposes.

Coverage

Risks covered under the insurance cover are the insolvency and/or protracted default of the exporter to repay his debt to the bank which is covered under the ECIB(SC).

Eligibility

Cover under ECIB (SC) can be considered to those banks whose exporter clients have Standard Asset Classification with an acceptable credit rating weightage/marks/score of 50% and above. The banks intending to seek ECIB (SC) cover for an exporter client should have sanctioned certain working capital limit facilities for export in favour of their exporter client. In other words, exporter clients that are NEW accounts and/or their credit rating weightage/marks/score is less than 50% are not eligible for ECIB (SC) covers.


The types of guarantees that are eligible for our indemnity under short term are: (a) Bid Bond Guarantee: This guarantee is issued by a bank on behalf of its exporter clients who desire to bid for a foreign tender. (b) Performance Guarantee: If the exporter wins a contract in the global tender, he may have to furnish a bank guarantee for his due performance. In this context, his bank may furnish the due performance guarantee to the foreign buyer. (c) Letters of Credit opened for purchase or import of raw materials in respect of export transactions. (d) Bank Guarantees furnished by exporters to DGFT, Customs, Central Excise or Sales Tax Authorities for the purpose of clearing goods without payment of duty or for exemption from tax for goods procured for export. (e) Bank Guarantees furnished in support of the export obligations by the exporters to Export Promotion Councils, Commodity Boards, the State Trading Corporation of India, the MMTC or Recognised Export Houses. Note:- The underlying contracts for issue of Bid Bond and Performance Guarantee should be purely for supply of goods for which payments due are to be received within a maximum period of 180 days. However, where the contracts are for both supply of goods and services or for providing services only, the relative proposals will be dealt with only by Project Exports Branch (PEB), even if the payments are to be received within 180 days.

Policy Term

The validity period of the ECIB (SC) Insurance Cover shall be the same as the period of the guarantee being covered. However, where the period of the guarantee is more than one year, cover shall be issued for a period not exceeding 12 months from the date of commencement of ECIB (SC) cover, subject to further extension on completion of 12 months. Banks may seek extension where the validity period of the guarantee covered under the ECIB (SC) cover exceeds the period of Insurance Cover. Banks request for such extensions would be examined, based on the latest position of the said ECIB (SC) cover and the Corporation shall use its discretion to extend the validity period of the ECIB (SC) cover subject to payment of additional premium and compliance of such other conditions, as may be stipulated by the Corporation at the time of extension of period of cover, depending upon the circumstance of the case with due assessment of risk at the material point of time. The extension of the ECIB (SC) after the one year period is not automatic, even though the bank had issued the bank guarantee for a period exceeding one year.


Premium Details

The rate of premium payable on the value of the Insured debt shall vary depending on the banks internal credit rating weightage / score / marks of the exporter client, as under:- For Credit Rating Score of 50% and upto 70% 12 Paise For Credit Rating Score of above 70% and upto 90% 11 Paise For Credit Rating Score of above 90% 10 Paise.

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What is health insurance? +
Health insurance is a type of coverage that pays for medical and surgical expenses incurred by the insured. It may also provide coverage for other types of health-related costs, such as prescription drugs, mental health services, and preventive care.
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Health insurance helps protect you from high medical costs. It provides access to medical care when you need it, helping to pay for doctor visits, hospital stays, surgeries, prescription medications, and other health-related services.
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Copayment (copay): A fixed amount you pay for a covered health care service, typically when you get the service. Coinsurance: The percentage of the cost you pay for covered health services after you've paid your deductible. For example, if your coinsurance is 20%, you pay 20% of the bill, and the insurance company pays the remaining 80%.
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A tax-advantaged account for people with high-deductible health plans (HDHPs). The funds roll over from year to year and can be used for qualifying medical expenses.
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An HMO is a type of health insurance plan that requires you to choose a primary care physician (PCP) and get referrals from them to see specialists. HMOs often have lower premiums and out-of-pocket costs but offer less flexibility in choosing providers.
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HSA: A tax-advantaged account for people with high-deductible health plans (HDHPs) The funds roll over from year to year and can be used for qualifying medical expenses. FSA: A tax-advantaged account for people with low-deductible health plans (LDHPs) The funds roll over from year to year and can be used for qualifying medical expenses.
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Term Life Insurance: Provides coverage for a specific period (e.g., 10, 20, or 30 years). If you pass away during this term, your beneficiaries receive the death benefit. It does not build cash value. Whole Life Insurance: Offers lifetime coverage with a death benefit and also builds cash value over time, which you can borrow against or use. Universal Life Insurance: A flexible policy that allows you to adjust the premiums and death benefit while also building cash value.
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If you stop paying premiums, your policy may lapse. For permanent policies like whole or universal life, the cash value may cover the premiums for a time, but eventually, if premiums are not paid, the policy will end.
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Auto insurance is a contract between you and an insurance company that provides financial protection against damage or injury caused by accidents, theft, or other incidents involving your vehicle. It covers both liability and your vehicle's repair costs depending on the type of policy.
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There are several types of auto insurance coverage, including liability, collision, comprehensive, uninsured/underinsured motorist, and additional coverage like roadside assistance and collision damage waiver.
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The amount of coverage you need depends on factors such as the value of your car, your driving habits, your state's legal requirements, and whether you own or lease your vehicle. A good starting point is to meet your state's minimum required coverage, but you may want additional coverage for added protection.
Can I cancel my auto insurance policy at any time? +
Yes, you can cancel your auto insurance policy at any time, provided you follow the correct procedure with the insurance company.
What is the difference between liability and comprehensive coverage? +
Liability coverage covers the damages and injuries caused by accidents, while comprehensive coverage also covers non-accident damages, such as theft or vandalism.
How do I choose the right auto insurance policy? +
When selecting an auto insurance policy, consider factors such as the type of coverage you need, your driving habits, the value of your vehicle, and your state's legal requirements.
What factors affect my auto insurance premium? +
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A deductible is the amount you must pay out of pocket before your insurance policy starts to cover the remaining cost of repairs or claims. For example, if you have a $500 deductible and incur $2,000 in damages, you will pay $500, and your insurer will pay the remaining $1,500.
What is the difference between comprehensive and collision coverage? +
Collision coverage pays for repairs to your vehicle after a collision with another vehicle or object, regardless of who is at fault. Comprehensive coverage covers non-collision incidents, such as theft, vandalism, or damage from natural disasters.
Can I get uninsured/underinsured motorist coverage? +
Yes, uninsured/underinsured motorist coverage is available in some states. This coverage provides financial protection for you if another driver is uninsured or underinsured.
Is auto insurance required by law? +
Yes, in most states, you are required to have a minimum level of liability insurance. Some states also require additional coverage like Personal Injury Protection (PIP) or uninsured motorist coverage. The requirements vary by state, so it’s important to check your local laws.
What happens if I don’t have auto insurance? +
If you drive without insurance, you risk facing legal penalties, fines, and the possibility of your driver's license being suspended. If you're involved in an accident, you could be held responsible for the damages.
Can I add other drivers to my auto insurance policy? +
Yes, you can add other drivers, such as family members or friends, to your policy. However, their driving record and age may affect your premium. It's important to inform your insurer about all the drivers in your household.
What should I do if I get into an accident? +
If you're in an accident, follow these steps: Ensure safety by moving to a safe location if possible. Call the police and file a report. Exchange contact and insurance information with the other driver(s). Take photos of the accident scene, vehicle damage, and injuries. Notify your insurance company about the accident as soon as possible.
What is home insurance? +
Home insurance is a contract between you and an insurance company that provides financial protection against damage or loss caused by natural disasters, theft, or other incidents.
What types of home insurance coverage are available? +
There are several types of home insurance coverage, including flood, fire, burglary, and liability. You may also have coverage for water damage, mold, and other property damage.
How much home insurance do I need? +
The amount of home insurance coverage you need depends on the value of your property, the type of coverage you want, and your insurance provider. You may also need additional coverage for water damage, mold, and other property damage.
Can I cancel my home insurance policy at any time? +
Yes, you can cancel your home insurance policy at any time, provided you follow the correct procedure with the insurance company.
What is the difference between flood and fire coverage? +
Flood coverage covers damage caused by floods, while fire coverage covers damage caused by fires.
How do I choose the right home insurance policy? +
When selecting home insurance, consider factors such as the type of coverage you need, the value of your property, and your insurance provider.
What factors affect my home insurance premium? +
Factors such as the type of coverage you need, the value of your property, and your insurance provider can significantly impact your premium.
Can I cancel my home insurance policy at any time? +
Yes, you can cancel your home insurance policy at any time, provided you follow the correct procedure with the insurance company.

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