Insurance premium rates to be cut for small exportershttps://indianexpress.com/article/business/insurance-premium-rates-to-be-cut-for-small-exporters-6001545/

Insurance premium rates to be cut for small exporters

The move follows measures announced by Finance Minister Nirmala Sitharaman on Saturday.

The Commerce Ministry has enhanced the insurance cover of banks up to 90 per cent from 60 per cent currently “for the working capital loans and moderation in premium incidence for the MSME sector,” it stated in a release.

Exporters with outstanding limits of less than Rs 80 crore may soon enjoy lower premium rates on their insurance, with the Commerce Ministry planning to take a proposal to this effect to the union cabinet “soon”. The move follows measures announced by Finance Minister Nirmala Sitharaman on Saturday.

The Commerce Ministry has enhanced the insurance cover of banks up to 90 per cent from 60 per cent currently “for the working capital loans and moderation in premium incidence for the MSME sector,” it stated in a release. For accounts with limits below Rs 80 crore, the premium rates will be moderated to 0.60 per annum. For those exceeding this limit, it will be 0.72 per annum for the same enhanced cover, it stated.

According to Commerce Minister Piyush Goyal, the premiums will also be divided into two categories—exporters of gold, jewellery and diamond, and exporters of non-gold, jewellery and diamond products. “When we assessed increases in ECGC’s claim ratio, we found that gold, jewelry and diamond sectors had higher claim ratios…because of which banks have difficulty in granting loans,” Goyal said. The ministry is awaiting the Cabinet’s approval on these specifics, he added.