NIRVIK Scheme

Context:

The Ministry of Commerce and Industry through ECGC, has introduced a new Export Credit Insurance Scheme (ECIS) called NIRVIK to enhance loan availability and ease the lending process.

About the Scheme:

• The main aim of introducing the scheme is to enhance the accessibility and affordability of credit for exporters.
• The decision is tipped to make the Indian exports competitive and make ECGC procedures exporter friendly, reduce insurance costs and ease of doing business.
• The insurance cover is expected to bring down the cost of credit due to capital relief, less provision requirement and liquidity due to quick settlements of claims and will ensure timely and adequate working capital to the export sector.
• The Export Credit Guarantee Corporation of India (ECGC) provides a credit guarantee of up to 60 per cent loss.
• Under the new ‘NIRVIK’ scheme, the insurance cover guaranteed will cover up to 90 per cent of the principal and interest. The insurance cover will include both pre and post-shipment credit.

Details of the Scheme

• The Finance Ministry has decided to increase the insurance cover for banks up to 90 per cent for working capital loans and moderation in premium incidence for the MSME sector to provide additional support to the banks in the wake of a global slowdown and rising NPAs.
• It will catalyze the banks to enhance the volume of export credit lending, especially to the MSME Sector with optimal pricing due to capital and risk optimization.
• The insurance cover will include not only the principal outstanding but also the unpaid interest for a maximum of two quarters or the NPA date, whichever is earlier. The coverage has been increased to 90 per cent from the present average of 60 per cent for both principal and interest.
• It will also cover both pre-shipment and post-shipment advances unlike the present system, where two different documents are issued by the ECGC.

ECGC :
The Export Credit Guarantee Corporation of India (ECGC) is a fully government-owned company that was established in 1957 to promote exports by providing credit insurance services.

The ECGC provides Export Credit Insurance to Banks (ECIB) to protect the banks from losses on account of export credit at the Pre and Post-Shipment stage given to exporters due to the risks of insolvency or protracted default of the exporter borrower.

GS-III: Nirvik Scheme

News

To enhance the loan availability of exporters, and the MSME sector the Export Guarantee Corporation of India (ECGC) has launched a new scheme called ‘Nirvik’. To revive the export sector, Commerce Ministry also launched the common digital platform for the issuance of certificates of origin.

Nirvik Scheme

• If there is any loss, then ECGC provided credit guarantee of up to 60% loss approximately.
• Now under new scheme Nirvik consumers and exporters will covered up to 90% and if there is any loss then in that case ECGC will refund 90% to the banks including principal and interest.
• Both pre and post shipment credit will also be covered under the new scheme.
• Banks will get up to 50 % within 30 days of complain lodge.
• Enhanced cover will ensure that Foreign and Rupee export credit interest rates will be below 4% and 8% respectively for exporters.
• The scheme envisages simplified procedure for settlement of claim and for provisional payment up to 50% within 30 days on production of proof of end-use of the advances in default by the Insured Bank.

Electronic Certificates of Origin (CoO)

• This platform will be a single access point for all exporters, for all Free Trade Agreements (FTAs)/ Preferential Trade Agreements (PTAs) and for all agencies concerned.
• As we know, for exports to countries with which India has free trade agreements (FTA), exporters have to show a certificate that the consignment originated in India.
• With the launch of this platform, these certificates can be obtained online and all the issuing authorities will be on the same portal.
• Certificate of Origin will be issued electronically which can be in paperless format if agreed to by the partner countries.
• Authorities of partner countries will be able to verify the authenticity of certificates from the website.