New Delhi, April 24 (PTI): Life Insurance Corporation (LIC) will not require the government?s assistance if it makes a provision for Rs 7,000-8,000 crore to comply fully with IRDA norms on solvency margin.

?LIC has provided Rs 16,500 crore in the last four years and has had a solvency margin of 110 per cent till 2003-04. If it provides another Rs 7,000-8,000 crore, LIC?s solvency margin will become 150 per cent as stipulated by IRDA and it will not need the government?s help,? a finance ministry official said.

The move assumes importance in the wake of LIC's commitment to IRDA of having a solvency margin (assets in excess of liabilities) to the tune of 150 per cent by 2004-05.

In order to meet the deadline, LIC had asked the government last year to infuse capital or amend the LIC act to enable it to tap the markets for raising resources to meet the Irda norms.

However, the government was not eager to amend the LIC act as it could have invited stiff resistance from the UPA allies and Opposition parties.

The finance ministry also did not provide any capital infusion into the country's largest insurer.

LIC has also requested the finance ministry to exempt from tax the funds provided for solvency margin. However, the insurer had to pay a hefty Rs 2,000 crore in taxes for 2004-05.

Left with no other options, LIC has to bridge the deficit in its solvency margin from its own resources.

LIC, which is one of the most sound financial institution in the country, has been able to meet its funding requirements from its own resources so far, the ministry official said.

?LIC has huge hidden reserves. Its assets exceed Rs 4,00,000 crore,? he added.

Although the LIC act provides government guarantee for all policies underwritten by LIC, IRDA asked the state-owned insurer to meet the solvency margin as it is the case for all other insurers. Considering the practical problems of LIC, IRDA asked the insurer to meet the solvency margin over a period of 5 years. LIC has been providing for the solvency margins in tranches in the last few years.