Common “To Do Points” under ECGC Policies

Introduction to Common “To Do Points” under ECGC Policies:

  • ECGC (Export Credit Guarantee Corporation of India) offers various policies and guarantees to support exporters and mitigate risks in international trade.
  • Along with availing these policies, there are common actions or “To Do Points” that exporters should follow to ensure effective utilization of ECGC coverage.

Common “To Do Points” under ECGC Policies:

1. Accurate Reporting:

  • Exporters must provide accurate and timely information about their buyers, shipments, and credit terms to ECGC.
  • Proper reporting ensures that the coverage provided is valid and appropriate.

2. Pre-shipment Inspection:

  • Some ECGC policies require pre-shipment inspection of goods to ensure their quality and conformity with the buyer’s requirements.
  • Exporters should arrange for inspections as per ECGC guidelines.

3. Due Diligence on Buyers:

  • Exporters should conduct thorough due diligence on potential buyers before extending credit.
  • Evaluating the financial stability and reputation of the buyer helps in minimizing credit risks.

4. Compliance with Policy Conditions:

  • Exporters should adhere to the terms and conditions specified in the chosen ECGC policy.
  • Non-compliance might lead to the denial of claims or coverage.

5. Document Retention:

  • Maintain all relevant documents related to export transactions, such as invoices, shipping documents, correspondence, and insurance policies.
  • These documents are crucial for making claims under ECGC coverage.

6. Timely Payment of Premiums:

  • Pay premiums for the selected ECGC policy on time to ensure continuous coverage.
  • Delayed premium payments could lead to a lapse in coverage.

7. Monitoring Changes:

  • Keep track of changes in the financial or political situation of the buyer’s country.
  • Promptly inform ECGC if there are significant changes that might impact the credit risk.

8. Prompt Claims Reporting:

  • In case of non-payment by the buyer, exporters should report the default to ECGC as per the policy guidelines.
  • Timely reporting is essential for initiating the claims process.

9. Compliance with Government Regulations:

  • Ensure compliance with all relevant export laws, regulations, and government policies.
  • Non-compliance can lead to legal issues that might affect the ECGC coverage.

Multiple Choice Questions (MCQs):

  1. What is the purpose of conducting pre-shipment inspection under ECGC policies? a) To determine the export premium rate b) To ensure accurate reporting of export data c) To assess the quality of exported goods d) To evaluate the exporter’s financial stability Answer: c) To assess the quality of exported goods
  2. What should exporters do to ensure continuous coverage under ECGC policies? a) Timely payment of premiums b) Frequent changes in policy terms c) Reporting only positive buyer information d) Ignoring due diligence on buyers Answer: a) Timely payment of premiums
  3. What action should exporters take in case of non-payment by the buyer? a) Report to ECGC after a year b) Inform the buyer’s competitors first c) Report promptly to ECGC as per policy guidelines d) Write off the amount and forget about it Answer: c) Report promptly to ECGC as per policy guidelines
  4. Why is document retention important for exporters under ECGC policies? a) To avoid due diligence on buyers b) To increase the export premium rate c) To ensure compliance with government regulations d) To make claims under ECGC coverage Answer: d) To make claims under ECGC coverage
  5. What is a crucial step in minimizing credit risks when dealing with international buyers? a) Ignoring buyer’s financial stability b) Skipping due diligence c) Conducting pre-shipment inspections d) Not reporting default to ECGC Answer: c) Conducting pre-shipment inspections

Conclusion: Understanding and following the common “To Do Points” under ECGC policies are essential for exporters to maximize the benefits of coverage and minimize risks associated with international trade. Adhering to these points ensures that exporters are well-prepared to handle various scenarios and make effective use of ECGC’s support.