The Hindu Business Line : ECGC settles claims on insolvency of large importer

EXPORT Credit Guarantee Corporation of India Ltd (ECGC) has settled claims aggregating to Rs 10.46 crore, in favour of three exporters of diamond and gold jewellery on account of insolvency of a large buyer in the US.

This buyer who used to import gems and jewellery worth around Rs 400 crore from India annually, declared Chapter 11 insolvency causing huge losses to a number of jewellery exporters from Mumbai.

ECGC said it had compensated loss of those exporters who had covered their export sales under its suitable credit insurance policy. A few more claims were under consideration of ECGC, a news release said.

At a recent meeting of gems and jewellery exporters at Mumbai, Mr S. Prabhakaran, Executive Director, ECGC, had spoken of the importance of a suitable credit insurance policy to cover the non-payment risk by unrelated overseas buyers, even if the latter were old, reputed or large importers.

"Commercial default and insolvency risk were the highest in the developed countries such as the US, UK, France and Germany rather than in the developing countries, contrary to general perception," he had said.

ECGC had paid claims worth Rs 66 crore to Indian exporters under their policies during 2004-05, of which claims to gems and jewellery industry amounted to Rs 2.18 crore. Aggregate claim payments to exporters and bankers amounted to Rs 352 crore as against the gross premium of Rs 516 crore earned by ECGC during the year.

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