which insurance companies are providing credit insurance service for SME's in India ..?

Consult SIDBI's office at Regional or national level for better insight on the issues covered. Even ICICI Bank alongwith their partner Prudential are quite active these days on SME's various requirements, an appropriate level contact can help you a lot there also.

Types of insurance for SME credit guarantees

(December 23, 2003 - Tuesday, The Philippine Star)

Insurance Requirements

The insurance must cover all guarantees that meet all the requirements. Guaranteed loans are required to be extended by such financial institutions as banks, credit associations, credit cooperatives, agricultural cooperatives, fishery cooperatives, government financial institutions, and insurance companies. Except for moneylenders, most of the financial institutions that extend loans to small and medium enterprises (SMEs) are eligible for the insurance.

Enterprises in the manufacturing, mining, construction, wholesaling, retailing, service and other sectors are eligible for the insurance. The agriculture, forestry, fishery and finance sectors are ineligible.

Enterprises (individuals or corporations) that utilize guarantees for their loans are also required to meet either of the criteria following the definition of SME for each industry. Cooperatives designated in the Small Business Credit Insurance Law are also eligible for the insurance.

Guaranteed loans should be used as funds for the promotion of SMEs‚ businesses, namely for operations and equipment needed to run their business. Therefore, funds not directly linked to business operations such as funds for consumption, living expenses and speculation are not eligible for the insurance.

The maximum amount of insurance for one enterprise is fixed by insurance type. Since the amount of insurance is equal to the amount of guarantee (guaranteed loan), the maximum amount of insurance limits the total amount of guarantees that credit gurantee corporations (CGCs) can provide to one enterprise for insurance coverage. For instance, the maximum amount of insurance for ordinary insurance is ¥200 million; a guarantee of over ¥200 milion for an enterprise is eligible for ordinary insurance.

Types Of Insurance

This insurance system has been improved by bringing in various new types of insurance to ensure the smooth flow of funds to meet the needs of SMEs. Also, the maximum amount of insurance for one enterprise was raised several times. The Japan Small and Medium Enterprises Corp. (Jasmec) offers the following eight types of insurance for indirect finance to CGCs. They are:

• ordinary insurance to facilitate the borrowing of funds for general purposes;

• no collateral insurance to allow SMEs to borrow money without collateral;

• special small-sum insurance to give small-scale enterprises with 20 employees or fewer, (in the trade and service industries, five employees or fewer) access to loans without collateral and guarantor;

• accounts receivable-backed insurance to allow SMEs to borrow money by using their accounts receivable as collateral;

• environmental pollution preventive facilities insurance, energy saving facilities insurance, overseas investment financing insurance and new business development insurance to promote the smooth flow of funds for specific projects without difficulties.

The type of insurance to be applied depends on the nature of the guarantee provided by CGCs.