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Business Economy


ECGC to clear all pending claims of exporters in four months

New Delhi, Jun 5 (UNI) The Export Credit Guarantee Corporation of India (ECGC) on Friday said it will clear all pending claims of apparel exporters in the next four months, even as it faces an exposure of Rs 100 crore in UK’s Laura Ashley and US’ JC Penney, two large retail store chains that have gone bankrupt.
''We are working under pandemic-related restrictions. But we are trying our best and we plan to clear all pending claims in four months’ time,'' ECGC CMD M Senthilnathan said in a webinar organized by the Apparel Export Promotion Council (AEPC) on ‘Managing Trade Credit under the Covid-19 Pandemic Situation’.
The ECGC Limited is a company wholly owned by the Government of India based in Mumbai, Maharashtra. It provides export credit insurance support to Indian exporters and is controlled by the Ministry of Commerce.
Answering to AEPC Chairman Dr A Sakthivel’s query on claims, Mr Senthilnathan added that the exporters should share all their documents and correspondences with their international buyers in one go for quick processing. If the transaction size warrants, ECGC may have to engage in a legal pursuit of payment, he stated.
Mr Senthilnathan said that the insolvency rates are high in developed economies and is going to shoot up sharply due to the pandemic’s impact on GDP growth, which is negative for most of the developed world. This has hurt medium and small enterprises in particular and also some large enterprises, he said.
''Already, we have got two large retail stores going for bankruptcy and where our exposure is close to the tune of Rs 100 crore. Claims are yet to be filed by the exporters but we have got information that the buyers have gone insolvent,'' he said.
Right now all the buyers and most part of the world is affected due to Covid containment measures, he said, adding that the ECGC recognizes that the situation calls for some credit accommodation and credit insurers need to take higher risks.
''We are prepared to take higher risks. In the last three years, the government has infused capital of Rs 1,350 crore in ECGC in recognizing the need to strengthen the institute supporting the exporters,'' Mr Senthilnathan added.
He said that credit insurance is purely based on documentary evidence unlike tangible insurance like property, vehicle or health insurance, and hence exporters should send a mail confirmation for any modification in the contract with the buyer.
All changes need to be documented because it may be required if the buyer fails to honour his part of the contract, he added.
However, he maintained that though the risks are high it should not deter the exporters from exploring the market.
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