ECGC gets 4,400-cr capital infusion now

With the capital infusion, the maximum liability that it can underwrite will increase from 1.1 lakh cr to `2 lakh cr
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With the capital infusion, the maximum liability that it can underwrite will increase from 1.1 lakh cr to `2 lakh cr

Highlights

Cabinet apporval for listing of Corporation

New Delhi: The Centre on Wednesday approved capital infusion of Rs4,400 crore to the ECGC, formerly known as the Export Credit Guarantee Corporation of India, over a period of five years. The investments will be made from FY2021-2022 to FY2025-2026.

Besides, the approved infusion, along with the company's listing process through the Initial Public Offering (IPO), is expected to increase the underwriting capacity of the ECGC to support more exports.

"Currently the maximum liability that the company can underwrite will be about Rs 1.1 lakh crore. With the additional capital of Rs 4,400 crore, the maximum liability that can be underwritten will be about Rs 2 lakh crore. The company's net worth is Rs 5,600 crore," Chairman-cum-Managing Director M.Senthilnathan had told IANS earlier.

According to him, the company's current equity base is Rs 3,450 crore and the solvency ratio will be about 10-11 times against the prescribed level of 1.5 times.

The ECGC promotes exports by providing credit insurance services. Its products support around 30 per cent of India's merchandise exports.

"ECGC plays a wider role in supporting exports from labour-intensive sectors and encourage bank lending to enterprises of small exporters, thereby leading to their revival. Capital infusion in the ECGC will enable it to expand its coverage to export- oriented industry, particularly labour-intensive sectors," an official communique said on Wednesday.

"The approved amount will be infused in instalments, thereby increasing the capacity to underwrite risks up to Rs 88,000 crore and this will enable the ECGC to issue covers that can support additional exports of Rs 5.28 lakh crore over the five-year period in line with the existing pattern."

According to report "Exports to Jobs" by the World Bank and the International Labour Organisation, Rs 5.28 lakh crore exports will lead to formalisation of 2.6 lakh workers.

Further, the total number of workers both formal and informal will increase by 59 lakh, as per the report.

About the business, Senthilnathan had said the Covid-19 pandemic has affected exports and in turn, the company's business.

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