Deposit Insurance and Credit Guarantee Corporation (DlCGC)
The Deposit Insurance Corporation was established by an Act of Parliament on January 1, 1962. In July 1978 it took over the undertaking of the Credit Guarantee Corporation of India Ltd.-a company promoted by the Reserve Bank of India. Consequently, its name was changed to Deposit Insurance and Credit Guarantee Corporation. It is wholly owned by the Re¬serve Bank of India and its entire share capital (Rs. 50 crores) is held by the latter. The Corporation performs the following two functions:
(a) Deposit Insurance : With a view to provide protection to depositors in commercial banks, regional rural banks and co-operative banks, the Corporation provides insurance cover up to a certain amount. .un¬der the scheme in the event of liquidation, reconsti¬tution or amalgamation of an insured bank, every de¬positor of that bank is entitled to repayment of his deposit held by him in the same right. and capacity in all branches of that bank up to Rs. 1 lSlkh. The Corporation charges premium from the insured banks for this purpose and credits the same to Deposit In¬surance Fund, maintained by it. Claims of depositors, whenever an insured bank fails or is amalgamated with another bank, are met out of this fund.
(b) Credit Guarantee: The Corporation provides guarantee cover to credit facilities extended to certain categor'ies of small borrowers belonging to the weaker sections of the society 'and also to the small scale in¬dustries. Such guarantees are'extended to the partici¬pating institutions, viz., Commercial Banks, Regional Rural Banks, Cooperative Banks, State Financial Cor¬porations arid other term lending institutions. Now the guarantee cover is available in respect of all pri¬ority sector advances. The guarantee support is weighted in favour of smaller and weaker borrowers and small scale industrial units established in back ward areas. The Corporation charges a guarantee fee from the banks and financial institutions which is credited to the Credit Guarantee Fund. Claims are met out of this Fund. The Corporation is implementing three Guarantee Schemes at present.
Export Credit Guarantee Corporation of India Ltd. (ECGe)
Export Credit Guarantee Corporation of India Ltd is a Government of India undertaking which plays a very important role in the field of export promotion and export finance. As the Indian exporters offer competitive credit terms to foreign buyers in the world markets, ECGC offers them protection from the risks inherent in selling goods on credit to foreign buyers. The standard policies issued by the ECGC cover the following commercial and political risks inherent in an export transaction :
(i) Commercial risks include insolvency of the im¬porter, default on his part to pay for the goods or fail-ure of the importers to accept the goods.
(ii) Political risks include restrictions placed on transfer of payments in rupees by the importers gov-ernment, war between the two countries, war, revolu¬tion or civil commotion in the buyer's country or can¬cellation of a valid import licence, additional han¬dling, transport or insurance charges arising from in¬terruption or diversion of voyage which cannot be re¬covered from the importer.
The Corporation re-imburses the exporter a specified percentage of loss incurred. These policies insure the risks of the exporters and thus enables them to get finance from the bankers on the collaterar security of the policies.
The ECGC also issues a number of financial guarantees to the banks to protect their interest in financing exports. The guarantees have been designed to en¬courage banks to give liberal credit-pre-shipment and post-shipment-for producing, packing and exporting goods. The ECGC re-lmburses the banks specifled percentage of their loss and charges guarantee fees in lieu thereof.
