• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

Credit insurance info venture on cards

DR. CHRISTY FERNANDEZ

Advertisement

Mumbai Jan. 21 State-owned Export Credit Guarantee Corporation of India Ltd (ECGC) is scouting for a private partner to sell majority stake in its revamped factoring business. Factoring is a facility by which an exporter gets up to 80 per cent of the value of his outstanding receivables in advance.

"If ECGC holds the majority stake in the joint venture company, then it will become another public sector, which we want to avoid. Starting with factoring business, ECGC will divest all its new ventures into a separate company to provide operational flexibility," said Dr Christy Fernandes, Chairman, ECGC.

Factoring Funds

IDBI Bank, the joint venture partner with ECGC, will provide the required fund for factoring. Of the total margin earned, IDBI will get 5 per cent, ECGC will take 1.25-1.75 per cent while 1.65-1.75 per cent will go for covering the risk.

"Though the 9 per cent cost on factoring looks big at the outset, it provides the much needed liquidity for SMEs, which otherwise have to wait for more than 180 days to realise their export credit. Banks charge more than 12 per cent on loans to SMEs," said Mr S. Prabhakaran, Executive Director, ECGC.

Urging both ECGC and IDBI Bank to keep the process for factoring simple, Mr Fernandes said: "Since the target audience for this product are SMEs, we should see that they are not burdened with unnecessary paperwork. However, this doesn't mean that it should be a free for all."

Insurance Information

ECGC is also planning a new business venture of providing credit insurance information to interested parties. "We have a database on 30,000-40,000 policy holders, which can be shared with importers for a fee. We deal in over 190 countries around the world," he said.

ECGC has framed 15-20 criteria based on which companies will be evaluated for factoring eligibility. ECGC is targeting a profit of Rs 1 crore-1.5 crore in next one year and adding Rs 2 crore every sequential years.

More Stories on : Outlook | Financial Services

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

Stories in this Section
Aviva Life raises capital by 199 cr

Copyright © 2007, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line