Cabinet approves Rs 4,400-crore capital infusion in ECGC Limited
The cabinet on Wednesday approved a Rs 4,400-crore capital infusion in state-owned credit insurance provider ECGC Limited and its listing through an initial public offering.
Commerce minister Piyush Goyal said the funds would be pumped into ECGC over a five-year period from this fiscal to 2025-26.
He said Rs 500 crore would be infused in this fiscal and another Rs 500 crore in the next financial year. The rest would be need based.
“Listing may enable ECGC to mobilise fresh capital from the market either through the same IPO or subsequently through a follow-on public offer (FPO) and thereby help in increasing the maximum liability cover for it,” a government release said.
The capital infusion would increase the ECGC’s capacity to underwrite risks up to Rs 88,000 crore. This will enable ECGC to issue covers that can support additional exports of Rs 5.28 lakh crore till 2025-26, the release said.
The government also approved the continuation of the national export insurance account (NEIA) scheme and infusion of Rs 1,650 crore grant till 2025-26.
The capital infusion in NEIA Trust will help tap the huge potential of project exports in focus markets. NEIA will be able to support exports worth up to Rs 33,000 crore.
The fund infusion in NEIA will help create 2.6 lakh jobs, including around 12,000 in the formal sector.
“While ECGC takes care of short term credit, the increase in corpus of NEIA will benefit medium and long term credit rolled out by the Exim Bank,” A. Sakthivel, president of the Federation of Indian Export Organisations (FIEO), said.
“Similar leveraging ratio of 1:20 will support project exports worth Rs 33,000 crore at a time when huge opportunities are unfolding for the sector with gradual opening of economies,” the FIEO president said.
The finance ministry on Wednesday expanded the scope of the Rs 4.5 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) to support micro, small and medium enterprises facing liquidity issues because of the Covid-19 pandemic.
The validity of the scheme has been extended by another six months till March 31, 2022, the ministry said in a statement.
The last date of disbursement under the scheme has been extended to June 30, 2022, the ministry said.