Standard Chartered Bank has introduced a new scheme which allows consumers to access cash against the security of a car. The facility called 'Mileage' would be available to consumers for all brands of cars except 'Ambassador' and 'Flat' which are up to five years old. The product primarily relates to covering the credit risk that a corporate, selling on credit to its army of dealers and large customers, is exposed to. This is the first time since nationalisation of the non-life insurance business a credit insurance cover is being launched. The launch of this product will mark the entry of insurance companies into an area that was hitherto the domain of banks and financial institutions.
Banks cover credit by discounting bills and letters of credit.
The Business Credit Insurance cover is available for a minimum sum insured of Rs 10 crore. Under the policy companies can cover the risk of their dealers or customers defaulting on goods sold on credit. New India is tying up with Germany insurer Gerling Credit Insurance Group, which will provide reinsurance and technical support for the product. In addition, the company plans to build its own database of credit-worthy debtors. Besides, the company will, in future, share the credit information provided by banks and financial institutions through the Credit Information Bureau.