Whole Turnover Packing Credit Guarantee: The salient features of Whole Turnover Packing Credit Guarantee (WTPCG) are as under:
(i) Advances covered. The WTPCG is issued to a bank if it is prepared to cover under the guarantee all its packing credit advances with the exception of packing credit advances to (a) small-scale industrial units, and (b) Government of India enterprises. No exception is available for advances granted to State Government or joint sector units.
(ii) Premium. The rate of premium on the guarantee is 6 paise per Rs. 100 per month as against 10 paise in the case of individual packing credit guarantee. Further, the guarantee fee is calculated on the average daily product instead of on the highest balance outstanding in the month.
(iii) Extent of cover. The extent of cover provided is 75% as against the normal 66-2/3%. In respect of advances to small-scale exporters with annual export turnover not exceeding Rs. 10 lakhs and his total annual turnover not exceed-ing Rs. 25 lakhs, the extent of cover is 90%.
(iv) Discretionary Limit. Every guarantee mentions a limit up to which the bank can allow packing credit advances to any of its exporter-clients without ECGC’s approval. This limit, known as ‘discretionary limit’, varies from bank to bank and may change from one guarantee year to another. All limits in excess of the discretionary limit need the approval of ECGC. If this approval is not obtained, the Corporation’s liability is limited to the extent under the discretionary limit.
(v) Declarations: A packing credit gets the cover under the guarantee by its declaration in the form specified and payment of premium to the Corporation. The monthly declaration along with the premium is to be submitted by the Head/ Zona/Regional office of the bank before the end of the succeeding month.
(vi) Annual Statement. A complete statement of limits in force at the commencement of the guarantee is to be furnished to the Corporation by the Head Office of the bank while obtaining the WTPCG for the first time. Annual statements are thereafter to be furnished as on 30th September each. Whenever new limits are sanctioned or existing limits are enhanced, reduced or cancelled, they should be reported to the Corporation immediately but in any case within 30 days.
(vii) Specific approval list. The corporation issues once a year a list contain-ing names of exporters advances to whom will be covered only on specific approval of the Corporation being obtained by the bank. the approval is required even if the limit is within the discretionary limit of the bank.
(viii) Advance against incentives. For banks which have taken WTPCG, the concession of reduced premium and extended coverage of 75% is also available to advances made by them at the pre-shipment stage under any export production finance guarantee. Declarations should be submitted separately under the export production of finance guarantee on these bases.
(ix) Extending due dates of advances. No permission from the Corporation is required for extension of due date of an advance up to 270 days from the date of advance. Extension beyond this period requires approval of ECGC.
(x) Default report. If the bank, apprehending losses in an account, stops granting fresh advances it should recall the balance outstanding in the account and send a ‘report of default’ to the Corporation, within 30 days. Premium need not be paid on an account after the occurrence of default. The bank should keep the Corporation informed of the recovery action taken by it. It should also take such other steps as may be suggested by the Corporation.
(xi) Nursing Programme. If in respect of a defaulted account, the bank agrees for a nursing programme, it should place the terms and conditions for such programmes before the Corporation for approval. If the nursing programme is approved by the Corporation, such accounts should not be included in the monthly declarations under WTPCG. Instead a separate packing credit guarantee will be issued for the account.
(xii) Claims. If the recovery efforts made by the bank fail to recover the entire debt within four months from the date of occurrence of default, the bank can invoke the guarantee. Claim should be filed after four months from the date of default but within 12 months from the date of expiry of guarantee. No fresh ad-vance should be made to an exporter who had defaulted.