The Insurance Regulatory and Development Authority's (IRDA) probe into the alleged violation of rules by the Life Insurance Corporation of India (LIC), pertaining to transfer of profits among its schemes, has revealed that no violation was committed, IRDA chairman J Harinarayan said here on Friday.
"There are no violations by LIC. There is an actuarial shortage as to the current actuarial estimates, which is not a real cash shortage," the IRDA chief said.
"They (LIC) project the gap between the assets and liabilities assuming a certain pattern of liability and a certain generation of income from investments made. And on that basis, they count it backwards, discount it appropriately and so there seems to be this much (Rs 14,000 crore)," he explained.
According to the IRDA chief, the actual cash disparity could be much less than the initially estimated Rs 14,000 crore. "The actual cash disparity could be of the order of Rs 300-400 crore per year. It is entirely possible that in years to come this imbalance is rectified so at the moment there is no cause for concern," he said, explaining that LIC generates a lot of surplus, which technically belongs to shareholders, and could be used by LIC to meet the shortfall in cash flow.
Allaying fears about the safety of public money, Harinarayan said: "These figures are disclosed in their annual accounts and are part of their non-performing assets (NPA), which are less than 1% of the asset base at about 0.75%. So there is no need for any anxiety on this front."
"There are no violations by LIC. There is an actuarial shortage as to the current actuarial estimates, which is not a real cash shortage," the IRDA chief said.
"They (LIC) project the gap between the assets and liabilities assuming a certain pattern of liability and a certain generation of income from investments made. And on that basis, they count it backwards, discount it appropriately and so there seems to be this much (Rs 14,000 crore)," he explained.
According to the IRDA chief, the actual cash disparity could be much less than the initially estimated Rs 14,000 crore. "The actual cash disparity could be of the order of Rs 300-400 crore per year. It is entirely possible that in years to come this imbalance is rectified so at the moment there is no cause for concern," he said, explaining that LIC generates a lot of surplus, which technically belongs to shareholders, and could be used by LIC to meet the shortfall in cash flow.
Allaying fears about the safety of public money, Harinarayan said: "These figures are disclosed in their annual accounts and are part of their non-performing assets (NPA), which are less than 1% of the asset base at about 0.75%. So there is no need for any anxiety on this front."
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