ECGC Covers for Banks (ECIB)
ECIB insures the lending bank against its own exporter-borrower failing to repay export credit.
ECGC's covers for banks, sold under the name Export Credit Insurance for Banks (ECIB), protect the lending bank, not the exporter. If a bank gives packing credit or buys an export bill and the exporter then fails to repay because of insolvency or protracted default, ECGC pays the bank an agreed share of the loss.
This is the side of ECGC an AD-branch credit officer deals with every month: declaring advances, paying premium, reporting defaults and lodging claims. The cover is the reason banks can lend to exporters with thin collateral.
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Who Is Protected Against Whom
- Insured
- The bank or financial institution dealing in foreign exchange that gives export credit.
- Risk insured
- The exporter-client's insolvency or protracted default in repaying the bank. Under the exporter policies the risk is the overseas buyer; under ECIB it is the bank's own borrower.
- Individual cover
- The bank chooses which exporter accounts to insure, one by one. Selective, but with lower cover and more paperwork.
- Whole turnover cover
- The bank insures all its eligible export advances under a single proposal, with permitted exclusions. Higher cover and lower premium than individual covers, which is why the courseware calls these bank-wide or portfolio covers.
The Main ECIB Covers
Individual Packing Credit (ECIB-INPC)
What it protects
Packing credit to a chosen exporter classified as a standard asset
Percentage of cover (per ECGC)
66-2/3%
Whole Turnover Packing Credit (ECIB-WTPC)
What it protects
All the bank's packing credit advances as per RBI guidelines
Percentage of cover (per ECGC)
75% up to a limit and 65% beyond for first-time banks; 55-75% for others depending on the bank's claim-premium ratio; 90% for small-scale exporters
Individual Post Shipment (ECIB-INPS)
What it protects
Post-shipment advances to a chosen exporter
Percentage of cover (per ECGC)
Varies by variant (with exclusion, without exclusion, exporter not holding the Standard Policy)
Whole Turnover Post Shipment (ECIB-WTPS)
What it protects
All post-shipment advances: bills purchased, discounted or negotiated, and advances against bills sent on collection
Percentage of cover (per ECGC)
90-95% where the exporter is an ECGC policyholder; 50-75% for non-policyholders, depending on claim-premium ratio; lower for bills on associates
Surety Cover (ECIB-SC)
What it protects
Losses on bid bonds and performance guarantees issued for exporters
Percentage of cover (per ECGC)
75%, with maximum liability at 75% of the guarantee value or the insured debt, whichever is lower
Buyer's Credit cover
What it protects
A bank's loan to an overseas buyer to purchase Indian goods, against the buyer's default or political events
Percentage of cover (per ECGC)
As per ECGC's terms for the deal
| Cover | What it protects | Percentage of cover (per ECGC) |
|---|---|---|
| Individual Packing Credit (ECIB-INPC) | Packing credit to a chosen exporter classified as a standard asset | 66-2/3% |
| Whole Turnover Packing Credit (ECIB-WTPC) | All the bank's packing credit advances as per RBI guidelines | 75% up to a limit and 65% beyond for first-time banks; 55-75% for others depending on the bank's claim-premium ratio; 90% for small-scale exporters |
| Individual Post Shipment (ECIB-INPS) | Post-shipment advances to a chosen exporter | Varies by variant (with exclusion, without exclusion, exporter not holding the Standard Policy) |
| Whole Turnover Post Shipment (ECIB-WTPS) | All post-shipment advances: bills purchased, discounted or negotiated, and advances against bills sent on collection | 90-95% where the exporter is an ECGC policyholder; 50-75% for non-policyholders, depending on claim-premium ratio; lower for bills on associates |
| Surety Cover (ECIB-SC) | Losses on bid bonds and performance guarantees issued for exporters | 75%, with maximum liability at 75% of the guarantee value or the insured debt, whichever is lower |
| Buyer's Credit cover | A bank's loan to an overseas buyer to purchase Indian goods, against the buyer's default or political events | As per ECGC's terms for the deal |
The Bank's Obligations Under a Whole Turnover Cover
- 1
Declare and pay monthly
Submit monthly declarations of advances and pay premium on time.
- 2
Seek approval for long extensions
Get ECGC's approval before extending due dates beyond a set period from the original due date: 360 days for packing credit; for post-shipment, 180 days (360 for status holders).
- 3
Report default within 4 months
Report a default within four months of the due date or extended due date if the advance is not recovered.
- 4
Claim within 6 months of the default report
File the claim within six months of reporting the default, then keep pursuing recovery and share recoveries with ECGC after the claim is paid.
Questions on bank covers, percentages and claims. No signup.
Why Post-Shipment Cover Is Higher for Policyholders
Under WTPS, bills of exporters who hold an ECGC exporter policy get 90-95% cover, while non-policyholders get 50-75%. The logic: when the buyer's risk is already insured under the exporter's own policy, the bank's exposure is smaller, so ECGC can cover more of it.
How CCFE Tests This
- check_circleWho is insured: in ECIB the bank is the insured and the exporter is the risk. Candidates who pick "the overseas buyer" are thinking of the exporter policies.
- check_circleIndividual vs whole turnover: whole turnover gives higher cover at lower premium in return for covering all accounts; individual cover lets the bank pick accounts.
- check_circleNumbers: INPC at 66-2/3%, the four-month default report and six-month claim window, and the 75% surety cover appear as single-fact questions. Note that courseware figures can lag ECGC's current product pages.
- check_circleProduct placement: bid bonds and performance guarantees sit under Surety Cover, not under packing credit or post-shipment cover.
FAQs
What is ECIB in ECGC?expand_more
Export Credit Insurance for Banks: ECGC's covers that protect banks against losses on export credit when the exporter-borrower becomes insolvent or defaults for a long period.
What is the difference between WTPC and INPC?expand_more
WTPC covers all of a bank's packing credit advances under one proposal with higher cover; INPC covers individual exporter accounts the bank selects, at 66-2/3%.
Which ECGC cover protects banks on performance guarantees?expand_more
The ECIB Surety Cover, which covers bid bonds and performance guarantees issued for exporters at 75%.
How soon must a bank report a default to ECGC?expand_more
Within four months of the due date or extended due date of the advance, and the claim must follow within six months of that default report.
Next steps
- ECGC Explainedarrow_forward
- Pre-shipment financearrow_forward
- Post-shipment financearrow_forward
- URDG 758arrow_forward
100 questions across all six modules, timed and scored.