NIRVIK Scheme OverView
NIRVIK Scheme OverView The Government of India established the Export Credit Guarantee Corporation of India (ECGC) to promote exports by providing credit insurance services. The company provides export credit insurance to banks to protect lending institutions from losses in the event of export credit at the pre-shipment and post-shipment stages, as well as to exporters during insolvency risks. As a result, it primarily serves to protect lenders from an exporter default.
The NIRVIK scheme aims to make obtaining a loan from a financial institution easier. The scheme will be monitored by the Ministry of Finance and focuses on lowering the cost of credit, creating capital relief, increasing exporter competitiveness, reimbursing taxes, and lowering insurance costs.
NIRVIK assists exporters by providing enhanced insurance coverage that covers both principal and interest. The scheme aims to increase the amount of money available to exporters in the country. It has a low documentation requirement and will provide funds to exporters for the pre- and post-shipment stages.
Niryat Rin Vikas Yojana Eligibility and Documentation
According to the scheme’s terms, only small exporters would be permitted to register for and benefit from this new centrally funded scheme. To be eligible for the benefits of this scheme, the business must be owned by an Indian citizen. According to the scheme guidelines, the low premium rate will only apply to exporters with bank account limits of less than Rs. 80 crore.
Whatever type of export agency it is, the owner must produce all official paperwork proving that it is a legitimate business. The GST department is required to provide all small exporters with the necessary registration documentation. Exporters who do not have a PAN card issued in their name will be unable to apply for benefits under the scheme. Whether the company is run by a single person or a partnership, an identification document, such as an Aadhar card, must be provided to verify the claimants’ legitimacy. If the applicants applied for and were approved for a bank loan, they must submit all loan-related documentation for review. Small exporters who want to collect benefits must submit all insurance policy paperwork.
The NIRVIK Scheme’s Advantages
Growth of the trade sector: The central government’s main goal is to give the export and commercial sectors a much-needed boost. According to projections, the implementation of this scheme will increase export credit by 30%.
Simple loan application : Exporters would be able to apply for loans from financial institutions under this initiative. The initiative also guarantees that the application process for business finance will be simplified. Banks will be able to disburse loans more efficiently as well.
Loan interest rate : Any small exporter who applies for a business loan through this initiative will be charged an annual interest rate of 7.6 percent.
Principal and interest sums coverage : With the launch of this new central government programme, small exporters will be entitled to a minimum of 90% coverage from the central authority on both the principal and interest sums.
Reimbursement of bank losses : An important statement clarifies that banks will no longer suffer as a result of loan nonpayment. If an exporter fails to return the credit amount, the ECGC will be responsible for refunding the banks.
Insurance premium rates: are being reduced because insurance coverage is required for both small and large exporters. Under the new scheme’s guidelines, the annual insurance premium has been reduced from 0.72% to 0.60%. This facility will only be available to a select group of exporters.
Tenure of the programme: Once officially launched, the respective minister has stated that the scheme will run for five years.
Small exporters: may suffer financial losses and fail to repay their bank loan during the bank refund period. The programme guarantees banks that if they file a claim for damages, they will receive 50% of the amount credited. The funds will be transferred to the bank within 30 working days.
Encourage banks to make loans : Because this scheme protects banks as well, banks will be less likely to reject a loan application from a small exporter.
The Advantages of the NIRVIK scheme
- The NIRVIK scheme is critical in making credit more affordable and accessible to exporters.
It will remove the procedural barriers and become more exporter friendly.
- Because of factors such as improved liquidity, capital relief, and quick claim settlement, the extended insurance coverage will lower the cost of credit.
- Because of simplified procedures and improvements in the ease of doing business, it will benefit MSMEs (Micro, Small, and Medium Enterprises).
- It provides more liquidity because working capital is always available and claims for export production are settled instantly.
- It makes Indian exports more competitive in both international and domestic markets.
- It provides lower tax reimbursements and insurance costs in order to increase credit loans and productivity.
- It guarantees that the foreign and domestic exchange rates stay below 4% and 8%, respectively.
- It reduces the risk of nonpayment.
- However, the scheme has yet to be launched by the Ministry of Finance. The government will announce the scheme application process for obtaining its benefits after the cabinet approves the scheme.
Documents needed for the Application Process:
A list of documents anyone will need to provide if they choose this option
- Documents for Business Registration: Regardless of the type of export agency, you must give all official documents to prove that you are a real company owner.
- For a successful NIRVIK registration, small exporters must receive a GST certificate from the Goods and Services Tax Department.
- An exporter cannot apply for this plan unless he or she has a business PAN card in the company’s name.
- Identity Proof: Whether an export company is owned by a partnership or a single individual, identity proof such as Aadhaar must be submitted throughout the application process.
- Bank Loan Certificates: If you’ve taken out a bank loan, you’ll need to provide the loan documentation for verification.
- Insurance Paperwork: Potential small exporters must provide all insurance-related documents to claim advantages under this scheme.
1)What exactly is the nirvik scheme?
The NIRVIK Scheme (also known as Niryat Rin Vikas Yojana) is a scheme run by the Export Credit Guarantee Corporation of India (ECGC) that aims to make lending easier and credit more accessible to small-scale exporters.
2)WHO initiated the Nirvik scheme?
The ECGC has launched a number of credit insurance schemes over the years to help exporters obtain the necessary credit for operating exports from the country. The NIRVIK scheme, for example, aims to make credit more accessible to exporters, particularly those operating on a small scale.