The Hindu Business Line : ECGC to seek more leeway in investments

THE Export Credit Guarantee Corporation (EGGC) will ask the government to allow it a little more flexibility in handling its Rs 1,700-crore investment portfolio.

"Yes, it is a matter of concern to us," Mr P.K. Dash, Chairman and Managing Director, ECGC, told Business Line, when asked if the insurer's investment income was affected by guideline-straightjacket.

ECGC's General Manager-Marketing, Ms Geetha Muralidhar, pointed out that while ECGC was registered with the Insurance Regulatory and Development Authority (IRDA), it still had to follow the guidelines of the Department of Public Expenditure.

As such, the company can invest only in government securities.IRDA's investment regulations for non-life insurers stipulate that not less than 30 per cent of the invested funds should be in securities of Central and State governments, not less than 10 per cent in infrastructure projects, not less than 5 per cent as loans to fire fighting establishments and housing and not more than 55 per cent in market securities.

On a Rs 1,700-crore investment portfolio, ECGC earned Rs 56 crore in the first half of the current year.

Mr Dash said that the corporation was expecting the Cabinet's approval for the Rs 300-crore additional capital to come shortly. At present, ECGC's capital is Rs 500 crore.

He said that the proposed National Export Insurance Account, for which the Finance Ministry has given its in-principle approval, would help ECGC underwrite long-term risks.

Project exports could go up to 15 years and, at present,

ECGC is unable to insure payments against such long-term exports. Mr Dash pointed out that practically every other country has a national export insurance account.

A corpus of Rs 2,000 crore is to be created for this purpose, funded entirely by the Government of India over the next seven years.

Mr Dash was in Chennai in connection with a `customer consultation campaign'. He said that ECGC had recently introduced a number of new policies in tune with the current needs of the customers. Some of these policies allowed customers to selectively insure specific export exposures, or cover only fixed sums of export exposures. This would cost the customer less.

Govt to infuse Rs 300 crore

THE Cabinet Committee on Economic Affairs (CCEA) has approved the increase in paid-up capital of Export Credit Guarantee Corporation of India Ltd (ECGC) to Rs 800 crore from the current level of Rs 500 crore.

The Union Finance Minister, Mr P. Chidambaram, disclosed this after a meeting of the CCEA on Wednesday.

The enhancement of equity base is expected to be completed through yearly Plan allocations by the end of the 10th Five-Year Plan.

Out of this amount, a provision of Rs 100 crore is already available during 2004-05. The rest would be provided in the remaining period of the Plan.

Enhancement of the equity base would equip the company to enlarge its export insurance cover. It may also help the company to hold a stake in the proposed Rs 2,000-crore National Export Insurance Fund (NEIF).

The authorised capital of ECGC currently stands at Rs 1,000 crore.

More Stories on : Financial Institutions

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Myths, old and new, of Indian banking

Rupee range-bound; securities decline

Indian banks to open branches in Pak soon

Birla Sun Life hopes to double premium income

`To lure more to opt for VRS' — PSU insurance staff wage hike at 8.5%

Purchase of bank's units — HCL Tech board okays pref issue to Deutsche Bank

ECGC to seek more leeway in investments

Retail finance to fuel sector growth

Call rates have `settled', says RBI Governor

Signature-based debit card launched

OBUs pursue NRI deposits

Bank unions happy with wage accord