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Tuesday, Aug 06, 2002

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ECGC scheme to cover loss over discrepancies

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IN a bid to boost exports from the north-eastern region to Bangladesh, the Export Credit Guarantee Corporation of India Ltd has introduced a scheme to cover losses arising out of discrepancies on documents under LC at higher premium rates, provided the LC terms permit direct delivery of goods to importers. The cover is to the extent of 25 per cent of the gross invoice value.

Exports to Bangladesh from the North Eastern region account for nearly Rs 300 crore annually, out of a total export of nearly Rs 2400 crore to Bangladesh from eastern India, and all exports are against LCs opened by non-prime banks in Bangladesh.

Talking to Business Line here, Mr R.V. Ajwani, Deputy GM and head of ECGC, eastern region, said the corporation was aware that some exporters of the region have encountered payment problems under LCs on account of discrepancy in documents from importers in Bangladesh.

Analysing the situation with regard to exports to Bangladesh from the North-East, Mr Ajwani said ECGC has started advising exporters to request importers in Bangladesh to incorporate the condition of direct delivery in the fresh LCs.

He said the LCs from Bangladesh banks do not stipulate direct delivery of goods to buyers.

Typically, as per the prevailing trade practice, he said that in most transactions, goods are delivered the same day and documents are negotiated after 10-20 days.

Asked why ECGC cover has not gained popularity in the region, he said the goods reach the destination by road well before the documents reach the hands of the LC opening bank.

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