The Export Credit Guarantee Corporation of India (ECGC) has modified its underwriting policy for export transactions to Russia. From February 25 onwards the cover category under which ECGC offers credit guarantee has changed from "open cover" to "restricted cover category – 1 (RCC-I)". The RCC-1 category of export credit guarantee offers revolving limits and is normally valid for a year after being approved on a case-to-case basis.
The corporation said that this change has been made to ensure that ECGC is able to assess and monitor the risks covered under its export credit insurance policies and to place appropriate risk mitigation measures. "The above measure will also enable the exporters/banks in India in assessing the export payment realisation prospects from buyers and/or banks in Russia," it said.
ECGC said customers have been asked to contact their servicing branch of ECGC for cover on shipments to Russia. "ECGC continues to monitor the situation and further review of the underwriting policy will be undertaken based on future developments," it said.
"In view of the prevailing situation, ECGC carried out a review of the country risk rating of Russia as per its extant underwriting policy. Accordingly, with effect from 25.02.2022, the cover category of Russia has been modified from Open Cover to Restricted Cover Category – I (RCC-I) for which revolving limits (normally valid for a year) are approved specifically on a case-to-case basis," it added.
Under the open cover category, policyholders were able to obtain cover on a more liberalised basis. For countries coming under this category, ECGC cover under short term is available for political risks for all transactions irrespective of limit on individual buyer or bank. However comprehensive cover (commercial plus political risk) has been on the basis of ECGC's assessment of the credit worthiness of the buyer/bank.
ECGC revises the cover category after evaluating the country on the prevalent economic and political settings, and the developments that would have an impact on the future, with an increase in horizon of 12 months, as well as forecast based on the strength and weakness of the country in terms of its economic and political strength.