In a bid to safeguard exporters and their lenders against the backdrop of a slowing western economy, the state-run Export Credit Guarantee Corporation of India (ECGC) is developing a rating system to grade foreign importers for its insurance cover. The modified scorecard will be based on quantitative and qualitative scores and will look at turnovers, repayment history and defaults to rate the buyers.
?We are taking the risk of exporters directly and therefore need to have a better rating system of overseas buyers. We have close to 90,000 active overseas buyers at present and this modified scorecard will help exporters take a calculated risk while selling goods overseas,? said ECGC chairman and managing director N Shankar.
The move assumes significance as Indian exporters are facing greater defaults from their clients in the wake of slowing western economies. The sectors attracting the maximum claims from the corporation are agriculture, gems and jewellery, ready-made garments, cotton and engineering goods. Country-wise, the majority of the claims are made to the US, UK, UAE, Germany and Italy.
In 2011-12, ECGC paid R713 crore in claim settlements to banks and exporters, of which the direct payments to banks were around R600 crore on account of defaults by importers. ?This was one of the highest payments by us to the banks because of the rising non-performing assets of banks. In fact, we want to increase the export cover of exporters,? Shankar added.
ECGC pays close to 80% of the claims on protracted default and the rest are on insolvency of the buyer.
In 2011-12, the corporation earned a gross premium of R1,004.83 crore, registering a growth of 13.5% over the previous fiscal. It added 16,814 overseas buyers to its exporters client base during the year. As on March 31, the ECGC?s short-term covers to exporters and banks under were over 13,000 and 3,000, respectively.
