Why is it in the news ?
The Union government announced the Nivik Scheme that is expected to give a boost to export lending and insurance cover for export credit.
What’s there in the NIRVIK scheme?
- It is announced by the Export Credit Guarantee Corporation (ECGC).
- Insurance cover guaranteed will cover up to 90% of the principal and interest.
- The increased cover will ensure that foreign and rupee export credit interest rates are below 4 percent and 8 percent respectively for the exporters.
- The insurance cover will include both pre and post-shipment credit.
Export Credit Guarantee Corporation of India
- ECGC Ltd. (Formerly known as Export Credit Guarantee Corporation of India Ltd.) wholly owned by the Government of India, was set up in 1957.
- It was established with the objective of promoting exports from the country by providing credit risk insurance and related services for exports.
- ECGC provides
- A range of insurance covers to Indian exporters against the risk of non – realization of export proceeds due to commercial or political risks
- Different types of credit insurance covers to banks and other financial institutions to enable them to extend credit facilities to exporters and
- Export Factoring facility for MSME sector consisting of working capital financing, credit risk protection, maintenance of sales ledger and collection of export receivables from the buyer located in overseas country.
What are the expected benefits of the NIRVIK scheme ?
- Enhance accessibility and affordability of credit for exporters.
- Make Indian exports competitive.
- Make ECGC procedures exporter friendly.
- Bring down the cost of credit due to capital relief.
- Less provision requirement and liquidity due to quick settlement of claims.
- Ensure timely and adequate working capital to the export sector.