Business Daily from THE HINDU group of publications
Saturday, Aug 15, 2009
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Business Daily from THE HINDU group of publications Saturday, Aug 15, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Money & Banking
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Outlook Web Extras - General Insurance French co Coface keen on credit insurance in India Our Bureau Mumbai, Aug. 14 French receivables management company Coface said it will float a credit insurance company in India if domestic regulations allow it to hold a controlling stake. The company, which is a subsidiary of French corporate and investment bank Natixis, operates in India as a credit management company. It has technical partnership agreements with IFFCO-Tokio Marine General Insurance Company and ICIC Lombard General Insurance Company through whom it offers domestic and export credit insurances to Indian companies. “We hope the regulators make an exception for the entry of monoline insurance companies in specialised areas such as credit insurance. If we are allowed a controlling stake, we will definitely set up a company in India,” said Mr Samuel Jesuratnam, Country Head, Coface India. Entry barrierThe Coface India chief explained that the entry barrier in terms of capital for setting up a general insurance company was high. “We would not like to invest $20 million and not have a controlling stake when the total premium for credit insurance in India is estimated at just around $45 million,” he said. Mr Jesuratnam pointed out that an insurance company could set up a branch in Singapore with a capital infusion of $4.5 million and garner larger business. Meanwhile, Coface, in its first survey of corporate credit risk management in India, has found that 72.91 per cent Indian companies, predominantly small and medium enterprises, preferred open account payment mode (documents against acceptance) as against letter of credit (9.60 per cent), advance payment (6.35 per cent), cash (4.64 per cent), “others” (4.49 per cent) and confirmed bank draft (2.01 per cent). “In India, companies are granting open account to face market competition more than to face customer’s liquidity problems,” the survey said. More than 90 per cent of the Indian companies in Coface’s sample universe had up to 5 per cent of their sales overdue and 70 per cent of them are granting 30 days’ standard payment terms. Coface has placed India on a higher pedestal vis-À-vis China when it comes to business climate. India has been assigned a higher rating (A4) as compared to China’s B rating. More Stories on : Outlook | Credit Market | General Insurance
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