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ECGC to get Rs 4,400 cr capital infusion
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SME Times News Bureau | 29 Sep, 2021
The Centre on Wednesday approved capital infusion of Rs 4,400 crore to
the ECGC, formerly known as the Export Credit Guarantee Corporation of
India, over a period of five years.
The investments will be made from FY2021-2022 to FY2025-2026.
Besides,
the approved infusion, along with the company's listing process through
the Initial Public Offering (IPO), is expected to increase the
underwriting capacity of the ECGC to support more exports.
"Currently
the maximum liability that the company can underwrite will be about Rs
1.1 lakh crore. With the additional capital of Rs 4,400 crore, the
maximum liability that can be underwritten will be about Rs 2 lakh
crore. The company's net worth is Rs 5,600 crore," Chairman-cum-Managing
Director M.Senthilnathan had told IANS earlier.
According to
him, the company's current equity base is Rs 3,450 crore and the
solvency ratio will be about 10-11 times against the prescribed level of
1.5 times.
The ECGC promotes exports by providing credit
insurance services. Its products support around 30 per cent of India's
merchandise exports.
"ECGC plays a wider role in supporting
exports from labour-intensive sectors and encourage bank lending to
enterprises of small exporters, thereby leading to their revival.
Capital infusion in the ECGC will enable it to expand its coverage to
export- oriented industry, particularly labour-intensive sectors," an
official communique said on Wednesday.
"The approved amount will
be infused in instalments, thereby increasing the capacity to underwrite
risks up to Rs 88,000 crore and this will enable the ECGC to issue
covers that can support additional exports of Rs 5.28 lakh crore over
the five-year period in line with the existing pattern."
According
to report "Exports to Jobs" by the World Bank and the International
Labour Organisation, Rs 5.28 lakh crore exports will lead to
formalisation of 2.6 lakh workers.
Further, the total number of workers both formal and informal will increase by 59 lakh, as per the report.
About the business, Senthilnathan had said the Covid-19 pandemic has affected exports and in turn, the company's business.
For FY21, the company had earned a premium of Rs 1,062 crore and the claims outgo was about Rs 900 crore to Rs 1,000 crore.
The premium income for FY20 was Rs 1,075 crore and the claims was about Rs 400 crore.
"The
market is recovering. We hope to log positive growth. While there is
export growth, there is no growth in export credit by the banks. Two
thirds of our business is derived from export credit by the banks and
the balance from the exporters," Senthilnathan said.
Targeting a
premium income of Rs 1,200 crore this year, Senthilnathan said the
investment income will be similar to last fiscal's figure of about Rs
850 crore.
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