Export credit indemnity cover is available prior to shipment if your company is carrying any risk of loss. A contract policy can be issued by Credit Oman to the exporter for such shipment. The extent of pre-shipment risk will depend upon the type of goods produced. Cover will be given for If non-standard or made to individual specification are to be exported . Otherwise, cover is given only for post shipment. The interest rate subsidy will be available from date of export only.
The Agency issues pre-shipment credit guarantee to commercial banks in order to assist the exporters in obtaining pre-shipment financing for the purpose of purchasing raw materials, processing/manufacturing and packing of goods to be exported.
The guarantee fills the security gap needed especially for small sized exporters who are in need of such financing but lack necessary collateral.
The exporter should first obtain export credit insurance cover against the buyer to whom shipments are to be made under the Policy in order to be eligible for pre shipment financing. Then, the eligible exporter who wishes to avail pre shipment financing facilities should contact his bank who in turn would apply to Credit Oman for guarantee to provide such financing. Credit Oman is not involved in providing such financing directly to the policyholder.
The post-shipment financing allows the exporters to improve on their liquidity or cash flow position as they get necessary funding from commercial banks through bills discounting of their export receivables and at a concessional interest rate as agreed between the Export Credit Guarantee Agency and the commercial banks in the country.
Upon receipt of intimation from the exporter to this effect, Credit Oman would contact the concerned bank to ascertain the reasons for not discounting the export bills which are credit insured under the Policy and endeavor to assist the exporter. Sometimes, the banks may have some restriction in extending further credit facilities due to past due facilities with them, or with the other banks which are under litigation.
Export Credit Guarantee Agency of Oman has signed MOUs with most commercial banks operating in Oman under the post-shipment financing program whereby credit insured exporters can discount their export bills with commercial banks against preferential interest rates, thus reducing their post-shipment financing cost. Credit Oman can also issue pre-shipment export credit guarantees whereby banks are able to provide financing at a pre-shipment stage for working capital needs of exporters. In addition, the Agency launched a new product during the first half of 2014 titled “Documentary Credit Insurance Policy” whereby the commercial banks in Oman add their confirmation on irrevocable letters of credit after obtaining the Agency’s guarantee in order to protect them against the risk of non-payment of an irrevocable letter of credit issued by the importer’s bank. Therefore, these products offered to commercial banks in the Sultanate of Oman will play a great role in the process of encouraging and promoting export insurance.
(1) You must use all reasonable and usual care and skill and take all practical measures, including any measures which may be required by us, to prevent or minimize loss and we shall not be liable for loss if you fail to take all such practicable measures to prevent or minimize loss within a reasonable time after you have learned of the occurrence of a cause of loss or of any event likely to cause loss;
(2) You must promptly notify Credit Oman in writing when you become aware of the occurrence of any cause of loss, or of any event likely to cause loss, or that the Issuing Bank is unable to pay its debts as and when they fall due or that the Issuing Bank is in financial difficulties.
(3) You must provide us with all information and documents that we may require.
The Export Credit Policy is normally recognized by the commercial banks as a valuable form of an additional security. If necessary, the exporter can assign the benefits of the Policy to his financing bank which allows Credit Oman to pay claims directly to the Bank. Consequently, the credit insured exporter can enjoy improved financial facilities through relatively lower interest rates.
The Agency has managed to recover16% of the total claims it has paid to its policyholders since its inception of its operations. This is in line with the average for other emerging ECAs where the recovery ranges from 10% to 20%.
He is expected to take necessary action to minimize the possible loss. Action should be prompt and effective.