NIRVIK Full Form
What is the full form of NIRVIK?
The Export Credit Guarantee Corporation of India (ECGC) has introduced the NIRVIK Scheme, also known as the Niryat Rhin Vikas Yojana, intending to make loans and credit more accessible to small-scale exporters. The NIRVIK Scheme, which the Finance Minister announced at the presentation of the Union Budget for 2020–2021 on February 1st 2020, would help the Indian economy's export sector. It will lower premiums for small exporters and offer excellent insurance coverage for exporters. A new programme called NIRVIK is being introduced to increase the amount of export credit disbursed. It offers high insurance coverage, lower premiums for small exporters, and streamlined claim and payment processes.The Commerce and Industry Ministry is in charge of creating the Scheme. The insurance guarantee under the Scheme, also known as the Export Credit Insurance Scheme (ECIS), may cover up to 90% of the principal and interest.
Outline Of The Scheme
The NIRVIK Scheme aims to lower rates for small-scale exporters while offering excellent insurance coverage for exporters. It is anticipated that this action will increase the amount of export credit disbursement. The programme was unveiled as 10 of the 30 exporting industries experienced a significant drop in outbound shipments in 2019. India's exports decreased by almost 1.8% to USD 357.39 billion in December 2019 for the sixth month, leaving a USD 118.10 billion trade imbalance. The NIRVIK Scheme's establishment was crucial because exporters were worried about access to finance. Credit disbursement decreased from Rs 12.39 lakh crore in 2017–18 to Rs 9.57 lakh billion in 2018–2019.
Main Aim
The programme’s primary objective is to lower expenses for small-scale exporters while also providing exporters with adequate insurance coverage. Additionally, it is anticipated that this action will boost the amount of export credit disbursement. This project was launched as outbound shipping in 10 of the top 30 exporting businesses fell significantly in 2019. India's exports dropped significantly in December 2019 for the sixth month in a row, resulting in a trade imbalance of USD 118.10 billion. Furthermore, as exporters were concerned about access to funding, the scheme's growth was crucial.
The Nirvik Scheme's Features
Growth of the trade sector: The main objective of the central government is to provide the export and commercial sectors with a much-needed boost. Estimates indicate that the implementation of this strategy will result in a 30% increase in export credit.
Simple loan application: Exporters will be able to apply for loans from banking institutions under this scheme. The programme guarantees that it will be simpler to apply for company financing. Additionally, banks will be able to disburse loans more effectively.
Interest rates on loans: The annual interest rate for any small exporter who applies for a business loan under this initiative will be 7.6 per cent.
Principle and interest sums covered: Small exporters will be entitled to at least 90% of the principal and interest sums covered by the central authority as of the start of this new central government programme.
Reimbursing bank losses: It is essential to make it clear that banks will no longer be harmed by the loan default. If an exporter does not return the credit amount, it will be the ECGC's duty to reimburse the banks.
Insurance premium rates being reduced: Since both small and large exporters must carry insurance, insurance premium prices are being cut. The new scheme's rules have decreased the annual insurance premium from 0.72% to 0.60%. Only a small number of exporters will have access to this tool.
Essential Points Of The Nirvik Scheme:
The scheme's primary highlights are as follows:
It now provides a loss guarantee on the credit of up to 60%.
To enhance the distribution of export financing
enhances insurance protection
Decrease in premiums for small exporters
Claim settlement procedures have been streamlined.
It is anticipated to increase exports by about Rs. 30 lakh crore in five years.