The Insurance Regulatory Development Authority (Irda) is likely to turn down the Life Insurance Corporation's (LIC) proposal to take a fresh look at the extra 50 per cent solvency margin requirement. | Talking to reporters at the sidelines of an insurance seminar, C.S. Rao, chairman of Irda, said, "LIC requested Irda to waive the extra 50 per cent solvency margin that was stipulated on the basis of government guarantee that they enjoy, but Irda does not intend to accede to their request." |
| Rao added, "LIC accounts have been finalised and will be presented to Irda soon. Let it examine the position of the solvency margin achieved by LIC following which Irda may take a decision on the time frame". |
| On when there was a possibility of Irda waiving the extra 50 per cent requirement for LIC, Rao said the question does not arise. Irda will take a decision after the accounts are examined. |
| Rao indicated that LIC had earlier asked for some more time for complying to the 150 per cent norm, which IRDA may allow, but the exact time to be provided to them will depend on LIC's balance-sheet position as of March 2003. According to reports LIC has already provided for Rs 12167 crore till March 2003. |
| S B Mathur, chairman LIC, had earlier said that it was very difficult to make the extra 50 per cent provision and had described the norm as not justified. |
| The only way out for LIC now was to provide for the margin, but over a larger period of time as mutually agreed by both the regulator and the insurance major. |
| Earlier LIC had asked Irda to consider the appreciation in its investment portfolio while specifying the 50 per cent extra. |
| LIC had also pointed out that the insurer had off-balance sheet reserves of Rs 50,000 crore by way of appreciation in government securities in addition to unrealised appreciation of Rs 10,000 crore. |
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