Oman's Export Credit Guarantee Agency (ECGA) has said it will soon introduce its Documentary Credit Insurance Programme (DCIP) to help the sultanate's banks engage in more letter of credit (L/C) business.

The new programme is part of the agency's mission to provide credit insurance to boost exports and help Omani exporters mitigate credit risks.

Risk profile

The DCIP will cover Omani banks against both commercial and non-commercial risks in export L/C operations.

Risks covered include the insolvency of the L/C issuing bank or the failure of the issuing bank to reimburse on the due date.

Political risks

Non-commercial risks covered under DCIP include currency transfer restrictions imposed by the government of the issuing bank's country.

Cover will also be provided for expropriation, confiscation of or intervention in the business of the issuing bank by a government authority and war or civil disturbance in the issuing bank's country.

Claims

In the event of a claim under the DCIP, ECGA will pay out up to 90% of insured losses.

Cover is provided for each irrevocable L/C once the bank insured under the programme bank confirms that L/C, provided the date of the confirmation is within the policy term.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.