State owned export credit insurer, ECGC Ltd has cut down its exposure to the scam hit gems and jewellery sector.
Geetha Muralidhar,CMD, ECGC said,“Keeping in view the ongoing developments in the sector, when large amount of bank loans have turned into non-performing assets(NPAs) in the sector, we have put our own control system in place. Earlier, we used to provide cover 75 per cent of loans. Now, whenever the export amount the sector crosses Rs 600 crore, our cover comes down to 50 per cent.
While ECGC Ltd has got 40-45 per cent of its exposure to gems & jewellery sector alone, it also has exposure in other sectors like cotton and handloom (30 per cent), readymade garments and hosiery goods 10 per cent), said Muralidhar.
“We paid Rs 568 crore of claims to gems and jewellery sector, whereas we also settled claims worth RS 1131 cr to banks. On July 31, we are holding an interaction with jewelers' body, GJEPC, to discuss the things forward’’ said Muralidhar
ECGC covers are backed by reinsurers.
“We were having tie-up with seven reinsurers, which has now come down to five. Two reinsurers-Asia Capital and Qatar Re backed out and the ECGC currently does business with GIC Re, Swiss Re, SCOR,Partner Re, Hannover Re,’’ informed Muralidhar.
ECGC has settled maximum no of claims, to the tune of RS 1100 crore, to banks last fiscal, the balance has gone to exporters.
A total of Rs 4 trillion advances have been given by the banks which have been provided cover by the ECGC which forms 65 per cent of our total portfolio.
“We've upgraded our ratings to five countries, Andorra, Seychelles, Malta, Monte Negro and Turkmenistan and downgraded the ratings of countries like Mozambique, Egypt and Tunisia,’’ revealed Muralidhar.
ECGC has ITC, TVS, Trident, HEG, Nylon (pharma), United Phosphorous, Graphite India, Toshiba and KH Exports as some of its top clients.
“Normally, we charge premium at the rate of 0.21 per cent of the sum assured,’’ added Muralidhar .
ECGC’s net profit was at Rs 74 crore as on March 31, as against Rs 282 cr a year ago.
“The profit has fallen as we had to keep a lot of reserves at Rs 6000 cr during the year.
ECGC has revised its modelling and added two new countries in its list, Turkey and Venezuela.ECGC’s current list of countries comprises of 239 .
“ Our Outlook looks good, with exporter business up at 10 per cent. We have got 19 products for exporters as of now. We are looking at revising them. We have got premium products for our premium customers who are with us for a longer period of time. We have got repudiation risk, which none of our rivals (Iffco Tokio, ICICI Lombard, Tata AIG are offering.
FY 2017-18, Muralidhar mentioned the company had 34,740 covers in force with a Maximum Liability of Rs.96,101 crore as at the end of the year on 31.03.2018.As regards cover to receivables of exporters 11946 polices were in force which covered a value of Rs.1,77,349crore.
The major coverage has been to Europe and North America for high risk transactions like open delivery and longer credit periods. Total numbers of overseas buyers on record were 5,12,000and live buyers on whom overall limit set was 1,27,847.
In all 33 banks covering more than 4000 branches had been supported in their endeavor of lending to exporters. The total numbers of bank accounts covered were more than 22,600.
The total Risk Value covered during the year comes to Rs.6,41,449 crore which is 33% of the total exports of the country. It is notable to observe that the portfolios consist of more than 85% of MSME exporters only.
Total numbers of overseas buyers on record were 5,12,000 and live buyers on whom overall limit set was 1,27,847.
Going forward, ECGC wants to increase the value of business covered to Rs 9.60 lakh crore from Rs 6.41 lakh crore,increase the share of exporters business from 27 per cent to 38 per cent, increase the risk value under Medium and Long Term (MLT)by 100% by FY 2020.