Insurance regulator IRDA on Friday gave a clean chit to Life Insurance Corporation of India, the largest insurance company in India, in the case of alleged violation of rules pertaining to transfer of profits among its various schemes.

The insurance watchdog earlier said it would launch an investigation into the books of LIC pertaining to 2009-10.

IRDA chairman J. Harinarayan said there is no violation committed by the LIC and it was just an actuarial shortage as to the current actuarial estimates.

An investigation done earlier by the IRDA revealed that there was deficit of around Rs. 14,000 crore in one account covering annuity policies that offered high assured returns.

“This is not a real cash shortage. ... They will project the gap between the liabilities and assets assuming a certain pattern of liability and assuming a certain generation of income from the investments made,” he told mediapersons after a function organised by IIRM here.

He said LIC generates a lot of surplus which technically belong to share holders.

“The LIC is used to meet the shortfall with this cash flow. It is entirely possible in the years to come that this imbalance will be rectified. So, at the moment it is not a cause of concern and these figures are disclosed in their annual account,” Harinarayana said.

The LIC, in a statement, earlier said the deficit is only a notional actuarially estimated figure for a period of over 20 years and it is different from a financial deficit or an investment loss.

More In: Companies | Business