0 Nimrat Asked: September 8, 20212021-09-08T11:58:34+05:30 2021-09-08T11:58:34+05:30 Comment on the”ECGC enhances credit worthiness of not only export business but also of exporters.” statement. 0 Comment on the”ECGC enhances credit worthiness of not only export business but also of exporters.” statement. 1 Answer Voted Oldest Recent Nimrat 2021-09-08T12:02:10+05:30Added an answer on September 8, 2021 at 12:02 pm The Export Credit Guarantee Corporation, (ECGC) has designed a scheme of Guarantees to Banks with a view to enhancing the credit worthiness of the exporter so that they would be able to secure better and large facilities from their bankers. To meet the varying needs of exporters. The Corporation has evolved the following types of Guarantees: 1.Packing Credit Guarantee; 2.Export Production Finance Guarantee; 3.Post-shipment Export Credit Guarantee; 4.Export Finance Guarantee; 5.Export Performance Guarantee; 6.Export Finance (Overseas lending) Guarantee. 1.Packing Credit Guarantee: Any loan given to an exporter for the manufacture processing, purchasing or packing of goods meant for export against a firm order or letter of credit qualifies for packing Credit Guarantee. The Guarantee is issued for a period of 12 months against a proposal made for the purpose and covers all the advances that may be made by the banks during the period to a given exporter within an approved limit. To banks, which undertake to obtain cover for packing credit advances, granted to all its customers on an all India basis. 2. Export Production Finance Guarantee: The purpose of this guarantee is to enable banks to sanction advances at the pre-shipment stage to the full extent of cost of production when it exceeds the FOB value of the contract/order, the difference representing incentives receivable. The extent of cover and the premium rate are the same as packing Credit Guarantee. Banks having WTPCG are eligible for concessionary premium rate and higher percentage cover. 3. Post-Shipment Export Credit Guarantee: Post-shipment finance given to exporters by banks through purchase, negotiations or discount of export bills or advances against such bills qualifies for the guarantee. It is necessary however, that the exporter concerned should hold suitable policy of ECGC to cover the overseas Credit risks. 4. Export Finance Guarantee: This guarantee covers post-shipment advance granted by banks to exporters against export incentives receivable in the form of duty drawback, etc. The Premium rate for this Guarantee is 7 paise per Rs. 100 per month and the cover is 75 per cent. Banks having WTPSG are eligible for concessional rate of premium and higher percentage of cover. 5. Export Performance Guarantee: Exporters are often called upon to execute bonds duly guaranteed by Indian banks at various stages of export business. An exporter who desires to quote for a foreign tender may have to furnish a bank guarantee for the bid bond. If he wins the contract, he may have to furnish bank guarantees to foreign buyers to ensure due performance or against advance payment or in lieu of retention money or to a foreign bank in case he has to raise overseas finance for his contract. 0 Reply Share Share Share on Facebook Share on Twitter Share on LinkedIn Share on WhatsApp Leave an answerLeave an answerCancel reply Featured image Select file Browse Answer Anonymously Save my name, email, and website in this browser for the next time I comment.