A recent move by State Bank of India to go in for whole-turnover insurance cover against all export advances, instead of being selective in certain cases, is expected generate substantial premium income for Export Credit Guarantee Corporation of India (ECGC) and reduce the premium cost by 60 per cent for the lender.
A senior ECGC official told Business Line on the sidelines of a conference organised by the Indian Silk Export Promotion Council here on Thursday that the insurer was expecting around 10 per cent overall annual premium income growth. on this score alone.
Mrs Tapasi Dey, Regional Manager (Eastern Region) of ECGC said the indications suggest that in the past two months since SBI adopted the blanket move, the average cost of premium for SBI has gone down by around 60 per cent, but the total volume has gone up.
“The annual premium income for ECGC is likely to go up by around 10 per cent, while for SBI the cost of risk-managed cover would be significantly lower”.
SBI, country's largest export credit provider, made the change-over from November 1 last year.
Under the terms of this export credit insurance cover, the bank is protected against losses that may be incurred in extending credit advances due to protracted default or insolvency of the exporter-client.