Export Guarantee Insurance
Payments for exports are open to risks even at the best of times. The risks have assumed large proportions today due to the far-reaching political and economic changes that are sweeping the world. An outbreak of war or a civil war may block or delay payment for goods exported. A coup or an insurrection may also bring about the same result. Economic difficulties or balance of payment problems may lead a country to impose restrictions on either import of certain goods or on transfer of payments for goods imported. In addition, one has to contend with the usual commercial risks of insolvency or protracted default of buyers. The commercial risks of the foreign buyer going bankrupt or losing his capacity to pay are heightened due to the political and economic uncertainties. Conducting export business in such condition of uncertainty is fraught with dangers.
The loss of a large payment may spell disaster for any exporter whatever his prudence and competence. On the other hand, too cautious an attitude in evaluating risks and selecting buyers may result in loss of hard-to-get business opportunities. Export credit insurance is designed to protect exporters from the consequences of the payment risks, both political and commercial, and to enable them to expand their overseas business without fear of loss.
Export credit insurance also seeks to create a favorable climate in which exporters can hope to get timely and liberal credit facilities from banks at home. For this purpose, export credit insurer provides guarantees to banks to protect them from the risk of loss inherent in granting various types of finance facilities to exporters.
Some of the companies providing Export Credit Insurance in India.
Export Credit Guarantee Corporation (ECGC)
New India Assurance Company Ltd.
Individuals
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