All about the NIRVIK scheme, its features, and benefits
Union Government has announced the Nirvik (Niryat Rin Vikas Yojna) scheme through Export Credit Guarantee Corporation of India (ECGC) in order to ease the lending process and enhance loan availability for exporters. The Export Credit Guarantee Corporation of India (ECGC) is optimistic that this scheme would give a fillip to export lending and insurance cover for export credit. It is an insurance cover guarantee that will cover up to 90% of the principal and interest. The cover will include both pre and post-shipment credit. Earlier, the ECGC was providing the credit guarantee of up to 60% loss.
- ECGC Ltd is wholly-owned by the Ministry of Commerce and Industry.
- The Government of India had initially set up Export Risks Insurance Corporation in 1957.
- The main objective was to promote exports from the country by providing credit risk insurance and related services for exports.
Key features of the Nirvik scheme:
- 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.
- The gems, jewellery and diamond (GJD) sector borrowers with a limit of over Rs 80 crore will have a higher premium rate in comparison to the non-GJD sector borrowers of this category due to the higher loss ratio.
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- For accounts with limits below Rs 80 crore, the premium rates will be moderated to 0.60 per annum and for those exceeding Rs80 crore, the rates will be 0.72 per annum for the same enhanced cover.
- It mandates inspection of bank documents and records by ECGC officials for losses exceeding Rs.10 crore as against the present Rs 1crore.
- The banks shall pay a premium to ECGC monthly on the principal and interest as the cover is offered for both outstandings.
Benefits of the scheme:
- It will enhance accessibility and affordability of credit for exporters.
- It will help make Indian exports competitive.
- It will make ECGC procedures exporter friendly.
- The insurance cover is expected to bring down the cost of credit due to capital relief, less provision requirement and liquidity due to the quick settlement of claims.
- It will ensure timely and adequate working capital to the export sector.
Sources- The Hindu, PIB
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