Requesting govt to infuse funds to increase exposure: N Shankar, ECGC Chairman

Written by Arun S | Updated: Aug 28 2014, 07:23am hrs
ECGC Ltd, formerly Export Credit Guarantee Corporation, has an arduous job at hand in providing export credit insurance to Indian businesses. In an e-mail interview with FE's Arun S, ECGC chairman and managing director N Shankar underlined the need for additional capital from the government. He said this year, ECGC expects a 10% growth in its gross premium from last fiscals Rs 1,304 crore. Excerpts:

Is ECGC looking to widen its equity base so that it can increase its coverage to help more exporters

ECGCs authorised capital was increased from R1,000 crore to R5,000 crore in July, 2013. The corporations paid-up capital increased from R100 crore in March 2012 to R1,133 crore at present. ECGC is requesting the government to infuse additional capital to enable the corporation take additional exposure on exporters/buyers/countries/ sectors to ultimately increase Indias exports.

ECGC had announced plans to provide direct factoring facility for micro, small and medium enterprises (MSME). How important is this business

We will start this business in a small way for select sectors and expand based on the experience. Factoring will help exporters in offering competitive terms without reducing the profitability and offer protection to them against the bad debts. ECGC will offer without-recourse finance on undisputed export up to 85% without any collaterals.

Companies such as Biocon had recently said that their businesses were down due to problems in Middle East and North Africa (MENA). They had ECGC cover for the MENA region in the past, but following the troubles, the companies had difficulties in getting the cover. How are you trying to address this problem

ECGC has revamped its Country Risk Rating Model (CRRM) with the support of E&Y. The country ratings are updated every quarter and are made available on our website. Certain countries with weak rating are classified as Restricted Cover Countries. For these countries ECGC provides covers for a shorter tenor and also these covers are approved at the head office level. As an export credit insurer, the corporation has to follow certain guidelines and ensure that at the time of underwriting the risk, probability of the risk materialising is not very high.

Recently, ECGC had inked an MoU on co-operation with the Export Credit Insurance Agencies (ECA) of BRICS member countries. Tell us about the scope for leveraging the linkage among BRICS ECIAs to boost Indian exports

The Export Credit Agencies from the BRICS countries are signatories to the MoU, according to which, the agencies will co-operate on joint projects in third countries. The information exchange envisaged under this enhanced collaboration will allow ECAs to minimise their risks and increase the volumes of BRICS members insurance export support. We will also target the joint venture companies in India established by the BRICS members and offer covers for their exports. So, the other members can extend covers to exports of Indian joint ventures in the respective countries. Also we can explore extension of cover for projects undertaken jointly by BRICS members in third countries subject to adequate quantum of Indian component in the overall project value.