Saturday, September 21, 2013

ECGC rejects banks’ claims on Zoom Developers debt

Export Credit Guarantee Corporation of India (ECGC) on Tuesday stated that the insurance claims filed by banks that had provided guarantees to the beleaguered Zoom Developers did not meet the terms and conditions of the insurance contract, which led to ECGC rejecting the claim. Besides, there were certain lapses on the part of the banks in operating the Zoom account, the insurance company added.

A consortium of 26 banks led by state owned Punjab National Bank had given Rs 2,600 crore non-fund based facilities to Mumbai-based Zoom Developers, an engineering and construction firm which had bagged many projects overseas, particularly in Europe and the UAE.

ECGC had given an insurance cover to 26 banks for advance payment guarantees issued by these banks with a claim liability of Rs 1,251.01 crore. Zoom Developers had defaulted on the payments to the overseas beneficiaries who invoked the bank guarantees. The policy cover was issued in 2009 and was extended for another year.

N Shankar, chairman and managing director, ECGC in an earnings conference told reporters, “We have examined the claims of banks in the Zoom Developers case twice. The claims and representations of the banks were found inadmissible and stands rejected.”

Another senior official of ECGC added, “In operating the Zoom Account, we found non-compliance with the terms of the insurance policy besides there were certain lapses on the part of the bank in operating the Zoom account.”

According to media reports, lead lender Punjab National Bank has obtained the consent of other banks in the consortium to move a winding up petition against ECGC for rejecting their claims.

The senior official of ECGC added, “Winding up takes place where a company has taken a loan and defaulted. We have not taken a loan from anyone.”

Shanker said that the company has asked the government for a capital enhancement of Rs 5,000 crore. ECGC has a paid up capital of Rs 1000 crore after getting a capital infusion of Rs 100 crore in September 2012.

ECGC reported a marginal increase of 7.8 per cent in net profit to Rs 242.79 crore during 2012-13 compared to a net profit of Rs 225.21 crore in the previous year.

The total income (premium and investments) rose by 10.5 per cent to Rs 1,308.5 crore.
By Falaknaaz Syed    May 15 2013 , Mumbai

No comments:

Post a Comment