Context: The Finance Minister, Nirmala Sitharaman, announced the NIRVIK (Niryat Rin Vikas Yojana) scheme in the Union Budget 2020-21 to provide high insurance cover for exporters and reduce premium for small exporters.



  • NIRVIK (Niryat Rin Vikas Yojana) is being launched to provide for high insurance coverreduction in premium for small exporters and simplified procedures for claim, settlement.
  • Scheme is being prepared by the Commerce and Industry Ministry. 
  • It is also called the Export Credit Insurance Scheme (ECIS) and the insurance guarantee could cover up to 90% of the principal and interest.
  • There is also a provision to subsidise the premium under the Scheme that has to be paid by exporters of certain key sectors.
  • The Export Credit Guarantee Corporation (ECGC) cover will also provide additional comfort to banks as the credit rating of the borrower is enhanced to AA rated account. This enhanced cover will ensure that Foreign and Rupee export credit interest rates will be below 4%and 8% respectively for exporters. 
  • Under ECIS, insurance cover percentage has also been enhanced to 90% from the present average of 60% for the both principal and interest.
  • The Export Credit Corporation currently provides credit guarantee of up to 60% loss.  
  • The main aim behind introducing the scheme was to enhance accessibility and affordability of credit for exporters. The decision will help make Indian exports competitive and make ECGC procedures exporter friendly, benefiting MSME exporters with a new scheme for reimbursing taxes, reduced insurance cost and ease of doing business.
  • The existing insurance covers issued by the ECGC will continue for the existing customer banks and similar covers will also be made available to all other banks. All standard accounts covered under ECGC on the date of transition shall be eligible for the insurance cover under the ECIS.
  • The insurance cover will include not only the principal outstanding but also the unpaid interest for a maximum of two quarters or the NPA date, whichever is earlier.
  • It will also cover both pre-shipment and post-shipment advances unlike the present system, where two different documents are issued by the ECGC.
  • The scheme also aims to simplify the procedure for settlement of claims and provisional payment of up to 50% within 30 days on production of proof of end-use of the advances in default by the Insured Bank.
  • The scheme will be in force for a period of 5-years. For accounts with limits below Rs 80 crore, the premium rates will be moderated to 0.60 per annum and for those exceeding Rs80 crore, the rates will be 0.72 per annum for the same enhanced cover.
  • Further, the scheme will mandate inspection of bank documents and records by ECGC officials for losses exceeding Rs.10 crore as against the present Rs 1 crore.
  • There will be no change in other aspects such as seeking approval of limits, monthly declarations with premium, report of default, Lodgment of Claim, extension in due date under Pre-Shipment/Post-Shipment, placing of borrower in Specific Approval List (SAL), Checking of Buyers Specific Approval List (BSAL) and Checking of Restricted Cover Category (RCC) and sharing of recovery and these will continue as per the existing terms and conditions of cover of ECGC.

BACKGROUND In September 2019, Commerce and Industry Minister, Piyush Goyal had announced that the gems, jewellery and diamond (GJD) sector borrowers with limit of more than Rs. 80 crore will have a higher premium rate under the NIRVIK Scheme as compared to non-GJD sector borrowers of this category due to the higher loss ratio. India’s exports contracted for a fifth month in a row by 1.8% in December 2019 to USD 27.36 billion and imports declined 8.9% to USD 357.39 billion, leaving a trade deficit of USD 118.10 billion. ABOUT EXPORT CREDIT GUARANTEE CORPORATION PRESENT CHAIRMAN: Geetha Muralidhar Established in 1957 to promote exports by providing credit insurance services, The Export Credit Guarantee Corporation of India (ECGC) is a fully government-owned company which provides Export Credit Insurance to Banks (ECIB) in order to protect them from losses on account of export credit at the Pre and Post-Shipment stage given to exporters due to the risks of insolvency or protracted default of the exporter borrower. It is based in Mumbai, Maharashtra and is controlled by the Ministry of Commerce. It was transformed into Export Credit and Guarantee Corporation Limited (ECGC) in 1964 and to Export Credit Guarantee Corporation of India in 1983. 

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