Central Government. Continued Rin Vikas Yojana (NIRVIK) to give credit to exporters, government to cut insurance premium rates for small exporters
Export Credit Guarantee Corporation (ECGC) has launched Niryat Rin Vikas Yojana (NIRVIK) in India. Under the NIRVIK scheme, the central government. Will provide easy credit to exporters and will cover 90% principal amount and interest rates. For the loss of bank account of exporters, compensation will be provided to banks by ECGC.
Finance Minister Nirmala Sitharaman has announced to launch the NIRVIK scheme in the latest Union Budget 2020-2021 present on 1 February.
Continued Rin Development Plan – NIRVIK Plan
The Finance Minister has announced the launch of a new scheme by the ECGC called NIRVIK – Niryat Rin Vikas Yojana. Under the NIRVIK scheme, Govt. Ensuring easy availability of credit to exporters and easy disbursement of loans. The Ministry of Commerce and the Ministry of Finance have discussed this NIRVIK scheme with all export bodies. All those exporters who come under the NIRVIK scheme, exporters will get 90% coverage on both principal and interest through insurance.
In the event of loss to any bank account, 90% of the interest and principle amount will be returned to the banks through ECGC. Lending banks will get 50% within 30 days from the date of lodge of loss claim. All small borrowers who have Rs. Exports of less than Rs. 80 crores will now have to pay 0.60% premium as on 31 March 2018, which is less than the current premium of 0.72%.
Such exporters are being divided into categories such as non-gold, jewelery and diamonds. This should be done because insurance claims are higher for players of gold, jewelery and diamonds which affects banks’ ability to lend. For all bank accounts with a limit of less than Rs. 80 crores, the premium rates being operated at 0.60 p.a. For all those whose limit is more than Rs. 80 crores, the premium rates will be 0.72% for the same cover.
Export Credit Insurance Scheme (ECIS)
The Export Credit Insurance Scheme (ECIS) has ensured a simplified procedure for settlement of claims and provisional payments of up to 50% within 30 days. For this, exporters will have to produce proof of the use of advances by default by the insured bank. ECIS support is going to be in force for a period of 5 years and finally, standard ECGC cover will be made available to banks with regular facilities.
The ECGC has also raised Rs. 10 crores and has been approved by the ECGC Board. Now inspection of bank documents and records by ECGC officers will be mandatory for loss of more than Rs. 10 crores Rs. Currently, the settlement of claims is limited to Rs. L crore. The scope of coverage is also expanded to include the date of the original arrears as well as NPAs for a maximum of 2 quarters.
This proposed insurance cover is intended to bring the cost of debt due to capital relief and less need for provision. Liquidity is another important factor for prompt settlement of claims to ensure timely and adequate working capital in the export sector.
Even after getting 90% insurance cover, small exporters will get loan at the rate of around 7.6%. With this move, there will be a 30% increase in export credit and a 20% increase every year. ECGC is going to cover Rs. 3 lakh crore debt. State Bank of India and ECGC have developed the NIRVIK scheme concept for foreign currency loans. In this scheme, SBI will provide dollar-denominated funds to all banks for exporters who face problems in raising funds.
| Name of the scheme | Niryat Rin Vikas Yojana or NIRVIK scheme |
| Launched in | India |
| Launched by | Narendra Modi |
| Announced by | Piyush Goyal |
| Date of announcement | September 2019 |
| Official launch date | Soon |
| Target beneficiaries | Small exporters |
| Supervised by | Export Credit Guarantee Corporation or ECGC |
Salient Features of NIRVIK Scheme
- Development of business sector – The primary objective of the central government is to give a much-needed boost to the export and trade sectors. It is estimated that with the implementation of this project, the export credit will increase by 30%.
- Easy loan application – Under this scheme, exporters will also get an opportunity to apply for loans from financial institutions. The scheme also ensures that the business loan application mode will be simplified. Banks will also be able to easily disburse loans.
- Rate of interest on loan – If a small exporter applies for a commercial loan under this scheme, he will be charged at 7.6% interest rate on an annual basis.
- Coverage Principal and Amount of Interest – With the launch of this new central government scheme, small exporters will be entitled to receive 90% coverage, on both the interest from the principal and the central authority.
- Compensating bank losses – An important statement highlights the fact that banks will no longer incur losses due to non-payment of loans. If an exporter fails to repay the credit amount, it will be the responsibility of the ECGC to refund the banks.
- Reduction in insurance premium rates – It is compulsory for small and large exporters to select insurance policies. As per the new plan guidelines, the annual insurance premium has been reduced from 0.72% to 0.60%. This facility will be extended only to a specific section of exporters.
- Tenure of the scheme – The Minister concerned has announced after the scheme is officially launched, it will run for a gradual five years.
- Bank Refund Period – Sometimes, small exporters face financial losses, and fail to repay bank loans. The scheme ensures the banks that if they claim damages they will get 50% of the credit amount. This amount will be transferred to the bank within 30 working days.
- Encourage banks to extend loans – As the scheme provides security to banks, these financial institutions will not wish to close a loan application made by a small exporter.
Eligibility to apply for benefits
- Only Small Exporters – The details of the scheme highlight that only small exporters will be allowed to apply and receive the allowances of this new centrally sponsored scheme.
- Business Owned by Indians – To get the benefits of this scheme, the business must be owned by an Indian citizen.
- Bank Limit Requirement – In the details of this scheme it is mentioned that the lower premium rate will be applicable only to the exporter who has bank account limits, who does not cross Rs. 80 crore mark.
Documents required for application
- Business registration documents – be it any type of export agency, the owner is required to produce all official documents, highlighting that it is a legitimate business house.
- GST certificate – All small exporters should have the necessary registration documents, which are issued by the GST department.
- Business PAN Card – If the exporters do not have a PAN card issued in the name of the organization, they will not be able to apply for the benefit of the scheme.
- Proof of identity of the owners – Whether the company is owned by a single person or a partnership firm, identity documents like Aadhaar card have to be submitted to check the authenticity of the claimants.
- Bank loan certificate – If the applicant has obtained and received a bank loan, all the loan related documents should be submitted for examination.
- Insurance Documents – It is mandatory for interested small exporters to submit all insurance policy papers if they want to claim benefits.
How can exporters apply for the scheme?
The NIRVIK scheme has been announced only by the Ministry concerned. Its actual launch date has not been mentioned yet. Therefore, nothing is known about how small exporters can apply for the benefits of this scheme. Once the central government makes a new announcement, you will read about the updates on our site.
This scheme will help protect the interests of small exporters. This will encourage them to take more risks, knowing that the central government will support them if there is a financial crisis. These measures will boost trade and commerce sectors in the country. Thus, the overall financial revenue of the nation will also increase