Cabinet Committee on Economic Affairs on Wednesday approved the listing of Export Credit Guarantee Corporation (ECGC) on the Stock exchange through an Initial Public Offer (IPO).
The ECGC is a wholly-owned CPSE of Government of India primarily set up with the objective of improving the competitiveness of the exports by providing Credit Risk Insurance and related services for exports. The Company intends to increase its maximum liabilities to Rs 2.03 lakh crore from Rs 1.00 lakh crore by 2025-26.
The proposed listing of ECGC Limited would unlock the true value of the company, promote ‘people’s ownership’ by encouraging public participation in the equity holding of the company and also promote Corporate Governance through transparency and greater accountability.
Listing may enable ECGC to mobilize 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. The disinvestment proceeds will be used for financing social sector schemes.
Meanwhile, the centre has also approved capital infusion of Rs 4,400 crore to ECGC (Export Credit Guarantee Corporation of India) over a period of five years so as to subsidize insurance of export shipments for exporters.
The decision was taken in the Union Cabinet here on Wednesday to boost the exports sector. The approved infusion along with efforts made to suitably synchronize with the listing process of ECGC through the Initial Public Offering will increase the underwriting capacity of ECGC to support more exports, the Cabinet brief said.
ECGC was established by the Government of India under Companies Act in 1957 to promote exports by providing credit insurance services to exporters against non-payment risks by the overseas buyers due to commercial and political reasons.
It also provides insurance covers to banks against risks in export credit lending to the exporter borrowers. ECGC endeavours to support the Indian export industry with its experience, expertise and an underlying commitment to progress and advance of India’s exports, the Ministry said.