Cabinet approves listing of Export Credit Guarantee Corporation through IPO on stock exchange

The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi has given approval for listing of Export Credit Guarantee Corporation (ECGC), an unlisted CPSE through the Initial Public Offer (IPO) on the Stock Exchange under the SEBI's (Issue of Capital and Disclosure Requirements) Regulations, 2018.

ECGC Limited is a wholly-owned CPSE of Government of India 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 lakh crore by 2025-26.

The proposed listing of ECGC 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 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.

The disinvestment proceeds will be used for financing of social sector schemes. The Government also approved capital infusion of Rs 4,400 crore to ECGC over a period of five years, i.e. from FY 2021-2022 to FY 2025- 2026. He further mentioned that the first instalment of Rs 500 crore will be done immediately by this fiscal. The second instalment of Rs 500 crore will be infused by the next fiscal year. The approved infusion along with efforts made to suitably synchronise with the listing process of ECGC through the Initial Public Offering will increase the underwriting capacity of ECGC to support more exports.

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 underlying commitment to progress and advance of India’s exports.

ECGC plays a wider role in supporting exports from labour-intensive sectors and encourage bank lending to enterprises of small exporters thereby leading to their revival. Capital infusion in ECGC will enable it to expand its coverage to export oriented industry particularly labour-intensive sectors. The approved amount will be infused in instalments thereby  increasing  the  capacity to   underwrite   risks   up to Rs 88,000 crore and this will enable ECGC to issue covers that can support additional exports of Rs 5.28 lakh crore over the five-year period in line with the existing pattern.

In addition, in terms of the report ‘Export to Jobs’ published by World Bank and International Labour Organisation in February 2019, Rs 5.28 lakh crore exports will lead to formalization of 2.6 lakh workers. Further, the total number of workers (both formal and informal) will increase by 59 lakhs as per the report.