Guideliness To Policy Holders : ECQC Procedures Defaults And Claims

In the last issue of this newsletters, aspects relating to credit limit and shipment declaration were discussed. This issue deals with defaults and claims, the most important aspects for the policy holders.

A. Reporting Of OverDue :

Any bill which remains outstanding for payment for more than 30 days from its due date should be reported to the Corporation in Form No.205 every month. Here again any delay in reporting default is considered as a lapse under the policy. Further report

B. ACTION TO BE TAKEN IN THE EVENT OF NON-ACCEPTANCE OF DOCUMENTS / GOODS :

1 Stop making further shipments to the defaulted buyer till the overdue bills are cleared.

2 Make appropriate arrangements for the safe custody of the goods.

3 Explore the possibility of negotiation with the buyer.

4 Get the bills NOTED AND PROTESTED if the facility is available in the buyers country.

5 Seek assistance of Chamber of Commerce, Indian Trade Representative, Embassy.

6 Make efforts to sell the goods to the alternate buyer with prior permission of the Corporation.

7 Issue notice of resales to the original buyer.

8 In case you do not succeed in finding an alternate buyer, make arrangements to reship the goods to India with prior permission of the Corporation.

9 Initiate steps for collection of debt through Debt Collecting Agency/ Solicitors. List of such agents and solicitors are available with ECGC.

C. ACTION TO BE TAKEN IN THE EVENT OF NON-PAYMENT OF BILLS ALREADY ACCEPTED:

1 Stop making further shipments to the defaulted buyer.

2 Seek assistance of Chamber of Commerce, Indian Trade Representative, Embassy.

3 Explore the possibility of negotiating with the buyer, i.e. extension of due date of the bills.

4 Get the bills NOTED AND PROTESTED

5 Initiate steps for collection of debt through Debt Collecting Agents/Solicitors, in consultation with ECGC.

(Please note that the exporters are required to take prior approval of the Corporation in the case of re-sale, extenstion, conversion in terms of payment, re-shipment and abandonment. Apply in a prescribed form.)

D. CLAIM : PH CAN PREFER CLAIM :

1 Where the loss is due to insolvency, one month after loss is admitted to the Insolvent Estate or after 4 months from the due date or extended due date, whichever is earlier.

2 Where the loss is due to the protracted default by the buyer, claim can be preferred after 4 months from the due date or extended due date.

3 Where the loss is due to the goods not having been delivered to the buyer, one month after the date on which the goods have been resold or otherswise disposed of by the Ph.

4 Where the loss is due to delay in transferring of funds from the buyer’s country, claim can be preferred 4 months after due date or stipulated waiting period applicable to that customer after completion of exchange control formalities or irrevocable d

5 Where the loss is due to diversion risk, claim is payable as soon as the proof of loss is furnished to the Corporation.

6. In all other cases, claim is payable 4 months after occurrence of the loss.

If the claim is not preferred within 2 years from the due date or extended due date, the claim will be treated as time barred. For small Exporters Policy, the period is 1 year.

E . CLAIM FORMS :

1 Prefer the claim in Form No.501, where the cause of loss is non-payment for the goods accepted by the buyer.

2 Prefer the claim in Form No.502, where the cause of loss in non-acceptance of the goods/ documents by the buyer.

(Please send the claim form together with the related documents to the servicing branch of ECGC).

F. BASIC DOCUMENTS :

1 Original/Certified Copies of original contract/ order.

2 Original/Certified copies of bill of lading/airway bill.

3 Original /Certified copies of Invoice.

4 Original/Certified copies of bill of exchange.

5 Non-payment advice received from the bank.

6 Certified statement of export turnover commencing 2 years prior to the shipment forming the basis of claim.

7 Correspondence exchanged with the buyer.

8 Copies of protest note.

9 Copy of plaint if legal action has been taken.

G. SPECIFIC DOCUMENTS :

1 Request of original buyer for change in terms of payment or extension wherever required.

2 Order from alternate buyer (for resale loss reimport and abandonment)

3 Approval of RBI wherever applicable (for resale loss).

4 Documentary evidence for the loss (for resale loss and reimport)

5 Bank realization certificate (for resale loss).

6 Proof of abandonment (for abandoned case) from any of the following agencies:

· Customs/Port authorities

· Indian Embassy or Trade Missions

· Chamber of Commerce as per RBI guidelines

7 Original or certified copies of insolvency (insolvency case).

8 Copy of the claim lodged with the official receiver (insolvency case)

9 Copy of letter received form the receiver admitting the claim (insolvency case)

10 Declaration by the exporter to the effect that he has done or omitted nothing whereby his claim, lodged with the official receiver is liable to be rejected (insolvency case)

11 Certified copies of advice received from the collecting bank indicating the date on which the payment has been made by the buyer in local currency and certifying that all exchange control formalities necessary for transfer of funds have been complied with by the buyer (transfer delay).