Journalism of Courage
Export Credit Guarantee Corporation (ECGC) has undertaken an exercise to revamp its country rating model,which is widely used by banks and exporters to assess the creditworthiness of overseas importers,and also increased the capital structure to support bigger export deals.
The public sector firm has roped in Ernst & Young (EY) to revamp its country risk rating system while Dun & Bradstreet (D&B) is assisting the corporation to improve its overseas buyer rating system.
EY will propose a revised rating model. The scope of assignment includes identification of new parameters and the kind of weight that should be given for each parameter so as to ultimately enable developing a rating score for each country, ECGC chairman and MD N Shankar told The Indian
Express in an interview.
ECGC,which currently rates over 200 countries,maintains a list of about 1 lakh overseas buyers who deal with Indian exporters and is in the process of implementing the buyer rating system developed with the assistance of D&B.
We have decided that the time has come to review and improve our systems so that we will be in a better position to serve the Indian exporters. Many domestic banks are looking at our country rating model for making provisions for their country exposures, he said.
The company is also getting ready to grow its financial muscle so that it can support larger Indian exports. It has increased its authorised capital from Rs 1,000 to Rs 5,000 crore. The corporations net worth is currently about Rs 2,500 crore and it has further made provisions to the extent of Rs 2,500 crore.
We have seen demands for increase in our exposures on single/group of exporters,buyers,countries,industry. For providing credit insurance for such larger deals more capital will be required though its solvency is already high, Shankar said.
ECGC has also sought approval from the insurance regulator Irda to launch specialised products for exporters in the SME segment. These include insurance cover for factoring companies,he said.
Shankar further said that ECGC has seen steady rise in demands for credit insurance from both public sector and private banks for their export business as they are realising the benefits of such covers.
Banks save on provisioning and capital by mitigating their risks on export segment by taking ECGC covers.
