NIRVIK Scheme

The NIRVIK Plan (also known as Niryat Rin Vikas Yojana) is a scheme run by the Export Credit Guarantee Corporation of India (ECGC) to help small-scale exporters get loans and improve credit availability.

The NIRVIK Scheme, which was announced by the Finance Minister during the Union Budget for 2020-2021 on February 1st, 2020, would help the Indian economy's export sector.

Details of the NIRVIK Scheme

The NIRVIK Scheme aims to provide exporters with excellent insurance coverage while lowering costs for small-scale exporters. It is expected that such a step will result in a greater disbursement of export credit.

The programme was introduced at a time when outbound shipments in 10 of the 30 exporting industries were on the decline in 2019. India's exports declined by roughly 1.8 percent to USD 357.39 billion in December 2019, leaving a trade imbalance of USD 118.10 billion for the sixth month in a row.

The NIRVIK Scheme was developed in response to exporters' concerns regarding loan availability. As it happened credit disbursement declined to Rs 9.57 lakh crore in 2018-2019 from Rs 12.39 lakh crore in 2017-18.

Features of the NIRVIK Scheme

• Up to 90% of the debt and interest will be covered by insurance.
• Foreignexport credit interest rates will be kept around 4% thanks to the expanded coverage. Interest rates on rupee export loan would be capped at 8%.
• The new programme would include both pre- and post-shipment credit.
• Borrowers from the gems, jewellery, and diamond industries who have a credit limit of more than Rs 80 crore would pay a higher premium rate than those from other industries due to the high loss ratio.

• Premium rates would be reduced to 0.60 per cent for accounts with limits less than Rs. 80 crore. The charges would be 0.72 per cent per annum for customers whose limits exceed Rs. 80 crore.
• If the losses surpass Rs. 10 crores, the exporter will be subjected to an ECGC examination. The ECGC will receive a monthly premium from banks because the principle and interest for both outstandings are covered.

To know more about other Government Schemes, visit the linked article.

Benefits of the NIRVIK Scheme

• The NIRVIK Scheme will be critical in boosting exporters' access to and affordability of loans, making Indian exports more competitive.
• In order to become exporter friendly, it will eliminate red tape and other procedural barriers.
• With variables like capital relief, greater liquidity, and rapid claim settlement in play, the enhanced insurance coverage is projected to lower the cost of borrowing.
• MSMEs (Micro, Small, and Medium Enterprises) would also benefit from the increased ease of doing business and the simplification of ECG processes.

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For more information about upcoming Government Exams, visit the linked article.