60 second interview: Geetha Muralidhar

Face to face | 20 September 2017

ECGC won TFR’s Best Export Credit Agency award in July {LINK} as it celebrates its 60th year of operation. Katharine Morton talks to Geetha Muralidhar, the indomitable head of the Indian ECA, about her strategy for success

How are you shaping ECGC’s success?

Sixty years has been a long journey for an organisation such as ECGC, to go through various economic cycles and continue to be relevant and to expand and make a surplus, a net profit, and return a dividend to the government. It’s been a very satisfying growth, not the explosive kind, but steady. In terms of business, the reach to the customers, the network and influence to stakeholders it has become significant.

You have 58 offices around the country. How do you engage exporters?

We are there in almost every export centre in the country covering the whole gamut of Indian exports from handicraft exporters to sophisticated engineering companies. We also cover commodities tea, coffee and jute exporters. The need for a physical presence, despite it being an electronic media age comes because there are so many startups and artisans and in rural areas who need hand holding initially until they grow to a size when they can have the [support of] electronics and a larger team. They need to be taught how an export opportunity can be converted into an actual transaction, fully protected.

Do you work with the banks in this regard – does the exporter make an initial approach to a bank and they then come to you?

In every export centre there is an association or chamber of commerce who refer initially exporters to us. Often the exporter first approaches a bank for finance and the bank takes a direct cover from us for lending to the exporter. They may also advise the exporter to take cover for the receivables against importers’ default. We also work through brokers and our 58 offices conduct quarterly seminars for potential exporters and non-policy holders as an educational initiative.

Why don’t you lend directly to exporters?

I strongly believe that lending is not the only solution. If a commercial market is ready to support a transaction, we should leave it to them. If a banker feels there is risk in lending, they can take the support of an export credit insurer. If that commercial insurer isn’t able to support it but the ECA of that country is ready to support the commercial bank lending be it working capital or medium or long term exports. If all this doesn’t work, then direct lending on the behalf of the state via an ECA can happen but this should be the last resort. If we don’t follow this natural progression in terms of risk degradation, then there will not be a level playing field and there will be unnecessary distortion. I go strictly by classifying exporters and importers as ‘strong’, ‘not very strong’ or ‘weak’ and when you put a matrix on it strong exporters and importers may not even need any support at all. The weakest exporter/importer may not be suitable for support at all. It’s the area in between this [extremes] where there are various instruments to help from non-recourse factoring to buyer credits by an ECA. This is the ideal.

ECGC is a pioneer in insurance cover for lending of banks particularly for working capital facilities to exporters. Developed country ECAs only bought in these instruments post the global meltdown of 2007/8 while India has had these since the 1960s. Our portfolios are subject to actuarial assessments and have run through various iterations and supported by multinational reinsurers. They have found the systems, procedures and product lines to be viable and worthwhile.

What is success in the future – more of what you do already?

Today we’re supporting directly and indirectly about 15% of India’s exports. The government wants that to be at least 20% by 2022 (the 75thanniversary of India’s freedom). We want to ensure no export opportunities are lost. Yes, India’s share in world export markets is not high but worries about protectionism globally and the failure of multilateralism aren’t going to have any major impacts on us because but this is going to be the time for South Asia and India is the powerhouse driving it.

India is the most favoured destination for investment today and government reforms across the country to tax laws, the ‘Make in India’ initiative, the startup initiatives, are working but unfortunately the world isn’t able to perceive the movement because we are so huge. It’s on the roll, and once it gains momentum there’s no stopping it. 

: Geetha Muralidhar, chairman-cum-managing director, ECGC

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