CAIIB · BFM

Risks in foreign trade- Role of ECGC

Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Bank Financial Management — CAIIB.

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What is the full form of ECGC and what is its primary mandate?

ECGC stands for Export Credit Guarantee Corporation of India Ltd., and its primary mandate is to provide credit risk insurance and related services to Indian exporters and banks financing exports.

What type of organization is ECGC — public sector or private?

ECGC is a government-owned public sector organization.

Which ministry administers ECGC and under what act is it incorporated?

ECGC is administered by the Ministry of Commerce and Industry, Government of India, and is incorporated as a company under the Companies Act.

What is the maximum credit period covered under ECGC's standard shipment policy?

Standard shipment policy covers credit periods up to 180 days.

What is the distinction between commercial risk and political risk in foreign trade as covered by ECGC?

Commercial risk refers to the failure of the overseas buyer to pay due to insolvency or default, while political risk covers non-payment arising from government actions, war, civil disturbance, or exchange transfer restrictions in the buyer's country.

What percentage of loss does ECGC typically cover for political risks?

ECGC typically covers up to 90% of loss for political risks.

What is a Shipment (Comprehensive Risks) Policy issued by ECGC?

It is a policy that covers Indian exporters against both commercial and political risks of non-payment by overseas buyers from the date of shipment of goods.

What is the primary purpose of ECGC's Country Risk Classification?

To categorize countries by risk level for export credit decisions.

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