Life Insurance Corporation of India कंपली की लेखा नीति

Mar 31, 2025

(A) SIGNIFICANT ACCOUNTING POLICIES:

1. Basis of Preparation:

The Financial Statements have been prepared under the historical cost convention, with fundamental accounting
assumptions of going concern, consistency and accrual basis, unless otherwise stated. The accounting and reporting
policies of the Corporation conform to accounting principles generally accepted in India (Indian GAAP), comprising
regulatory norms and guidelines prescribed by the Life Insurance Corporation Act, 1956 (as amended), Insurance
Regulatory and Development Authority of India (Actuarial, Finance and Investment Functions of Insurers) Regulations,
2024, Master Circular on Actuarial, Finance and Investment Functions of Insurers IRDAI/ACTL/CIR/MISC/80/05/2024
dated 17^th May, 2024 (“the Master Circular”) and other circulars issued by the IRDAI from time to time, provisions of the
Insurance Act, 1938, as amended and in compliance with the Accounting Standards notified under Section 133 of the
Companies Act, 2013, and amendments and rules made thereto, to the extent applicable.

2. Use of Estimates:

The preparation of Financial Statements is in conformity with generally accepted accounting principles in India (Indian
GAAP), which requires the management to make estimates and assumptions that affect the reported amounts of income
and expenses for the year, reported balances of assets and liabilities and disclosures relating to contingent liabilities as on
the date of the Financial Statements. The estimates and assumptions used in the accompanying Financial Statements are
based upon management’s evaluation of the relevant facts and circumstances up to and as on the date of the Financial
Statements. Actual results may differ from the estimates. Any revision to the accounting estimates is accounted for
prospectively.

3. Revenue Recognition:

Premium Income:-

a) Premium is recognized as income when due, for which grace period has not expired and the previous installments
have been paid. In case of Linked Business, the due date for payment is taken as the date when the associated units
are created.

b) Income from linked funds which includes fund management charges, policy administration charges, mortality charges,
etc. are recovered from linked fund in accordance with terms and conditions and recognized when due.

c) Premium ceded on re-insurance is accounted in accordance with the terms of the re-insurance treaty or in-principle
arrangement with the re-insurer.

Investment Income:-

d) Interest income in respect of all Government securities, debt securities including loans, debentures and bonds,
Pass Through Certificate (PTC), mortgage loans is recognized in Revenue Account as per the guidelines issued by
Insurance Regulatory and Development Authority of India.

e) In respect of purchase or sale of Government and other approved securities from secondary market, interest for the
broken period is paid / received on settlement basis.

f) Interest, Dividend, Rent, etc. are accounted at gross value (before deduction of Income Tax)

g) In respect of loans, debentures and bonds, accrued interest as at the date of the balance sheet is calculated as per
method of calculation of simple interest mentioned in the loan document/information memorandum or such other
document. In respect of Government and other approved securities and mortgage loans, accrued interest as at the
date of balance sheet is calculated based on 360 days a year.

h) Profit or Loss on sale of Securities/Equities/ Mutual Fund is recognised in Revenue Account in the year of sale.

i) Dividend on quoted equity shares where right to receive the same has fallen due on or before 31^st March (i.e. dividend
declared by the investee company) is taken as income though received subsequently. Dividend on unquoted equity
is taken as income only on receipt.

j) Interest on Loan against Policies is accounted for on accrual basis.

k) Rental income is recognized on accrual basis and rent/license fees which is in arrear for more than 6 months is not
recognized as income. Upfront premium on rent is accounted on cash basis.

l) Dividend on Preference shares/Mutual Fund is recognized as income only on receipt.

m) Interest on application Money on purchase of debentures/bonds is accounted on receipt basis.

n) Income on venture capital investment is accounted on receipt basis.

o) Income from zero coupon bonds is accounted on accrual basis.

p) Outstanding interest on NPA’s as at balance sheet date is recognized as interest suspense.

q) Premium on redemption/maturity of investments is recognized as income on redemption/maturity.

r) Processing fee for proposed investments, if any is accounted on receipt basis.

1. Acquisition Costs:

Acquisition Cost is expensed in the period in which they are incurred. Acquisition costs are those costs that vary with and

are primarily related to the acquisition of new and renewal insurance contracts.

5. Benefits Paid:

a) Benefits paid consist of the policy benefit amount and claims settlement costs, wherever applicable.

b) The date of recognition of claim shall be the date of receipt of intimation of death or surrender by the policy holder. The
date of recognition of claims in case of Maturity, Survival benefits, Annuity etc. shall be as per the terms and condition
of the policies.

c) Repudiated claims disputed before judicial authorities are treated as contingent liability based on management
assessment and prudence.

d) The provision is made for disputed legal cases pertaining to repudiated claims where decision is given against the
Corporation by Lower Forum/Court to the extent of entire amount awarded by the Forum/Court against LIC, pending
the Appeal/Writ/Revision filed by LIC.

5. Investments:

A] Non Linked Business

a) Debt Securities including Government Securities and Redeemable Preference Shares are considered as ‘held
to maturity’ and is carried at historical cost subject to amortization as follows:

(i) Debt Securities including Government Securities, where the book value is more than the face value, the
premium is amortized on straight line basis over the balance period of holding/maturity. Where face value
is greater than book value, discount is accounted on maturity.

(ii) Listed Redeemable Preference Shares, where the book value is more than the face value, the premium is
amortized on a straight line basis over the balance period of holding/maturity and is valued at amortised
cost if last quoted price (not later than 30 days prior to valuation date), is higher than amortised cost.
Provision for diminution is made if market value is lower than amortised cost.

Unlisted Redeemable Preference Shares where the book value is more than the face value, the premium is
amortised on a straight line basis over the balance period of holding/maturity and are valued at amortised
cost less provision for diminution.

Listed Irredeemable Preference Shares are valued at book value if last quoted price (not later than 30 days
prior to valuation date), is higher than book value. In case last quoted price is lower, it is valued at book
value less provision for diminution.

Unlisted Irredeemable Preference Shares are valued at book value less provision for diminution.

b) Listed equity securities that are traded in active Markets are measured at fair value on Balance Sheet date and
the change in the carrying amount of equity securities is taken to Fair Value Change Account.

c) Unlisted equity securities and thinly traded equity securities are measured at historical cost less provision for
diminution in the value of such investments. Such diminution is assessed and accounted for in accordance with
the Impairment Policy of the Corporation. A security shall be considered as being thinly traded as per guidelines
governing mutual funds laid down from time to time by SEBI.

d) All Investments are accounted on settlement basis except for purchase or sale of equity shares & government
securities from the secondary market.

e) The Investment Property is carried at the Revalued amounts and the change in the carrying amount of the
investment property is taken to Revaluation Reserve. Investment property is revalued at least once in every three
years. The basis adopted for revaluation of property is as under:-

(i) The valuation of investment property is carried out by Rent Capitalization Method considering the market
rent.

(ii) Investment properties having land alone without any building/structure is revalued as per current market
value.

f) Mutual fund and Exchange Traded Fund (ETF) investments are valued on fair value basis as at the Balance
Sheet date and the change in the carrying amount of mutual fund /ETF is taken to Fair Value Change Account.

g) Investments in subsidiary companies, joint ventures and associates are carried at cost.

h) Investment in venture fund / Alternative Investment Fund (AIF) is valued at cost wherever NAV is greater than
the Book Value. Wherever NAV is lower than Book value the difference is accounted as diminution.

i) Money Market Instruments are measured at book value.

j) Derivatives:

Interest Rate Derivative (IRD) contracts for hedging of highly probable forecasted transactions on insurance
contracts and investment cash flows in Life, Pension and Annuity business are accounted for in accordance with
the ‘Guidance Note on Accounting for Derivative Contracts’ issued by the Institute of Chartered Accountants of
India (ICAI) and IRDAI Investment Master Circular as amended from time to time.

The Corporation has well defined Board approved Interest rate risk hedging Policy and Process document
covering various aspects related to functioning of the derivative transactions undertaken to mitigate Interest
rate risk as per the Interest rate risk hedging strategy. At the inception of the hedge, the Corporation designates
and documents the relationship between the hedging instrument and the hedged item, the risk management

objective, strategy for undertaking the hedge and the methods used to assess the hedge effectiveness. Hedge
effectiveness is the degree to which changes in the fair value or cash flows of the hedged item that are attributable
to a hedged risk are offset by the changes in the fair value or cash flow of the hedging instrument. Hedge
effectiveness is ascertained at the time of inception of the hedge and periodically thereafter at subsequent
reporting dates.

Forward Rate Agreement (FRA) is a forward contract to hedge the risk of movements in interest rates. In a FRA
contract, the Corporation fixes the yield on the government bond for the period till the maturity of the contract.
The Corporation enters into FRA to hedge interest rate risk on forecasted transactions. (A) Reinvestment of
maturity proceeds of exiting fixed income investments; (B) Investment of interest income receivable; and (C)
Expected policy premium income receivable on insurance contracts which are already underwritten in Life,
Pension and Annuity business.

The Forward Rate Agreement (FRA) contract is valued at the difference between the market value of underlying
bond at the spot reference yield taken from the FBIL and present value of contracted forward price of underlying
bond including present value of intermediate coupon inflows from valuation date till FRA contract settlement
date. Mark-to-market valuation / fair valuation of the derivative financial instruments is done independently by
both the parties i.e the Corporation and the counter party. The counter party (Bank) valuation is considered for
margin settlement as the counter party (Bank) is the valuation agent as per FRA.

Hedging instruments are initially recognised at fair value and are re-measured at fair value at subsequent
reporting dates. The effective portion of fair value gain/loss on the interest rate derivative that is determined
to be an effective hedge is recognised in “Hedge Fluctuation Reserve” or “HFR” in the Balance Sheet and
the ineffective portion of the change in fair value of such derivative instruments is recognised in the Revenue
Account / Profit & Loss Account in the period in which they arise. The fair value gain/loss on the interest rate
derivative that is determined to be an ineffective hedge is recognised in the Revenue Account / Profit & Loss
Account in the period in which they arise.

The accumulated gains or losses that were recognised in the “Hedge Fluctuation Reserve” are reclassified into
Revenue Account / Profit & Loss Account, in the same period during which the income from investments acquired
from underlying forecasted cash flow is recognized in the Revenue Account / Profit & Loss Account. Hedge
accounting is discontinued when the hedging instrument is terminated or it becomes probable that the expected
forecast transaction will no longer occur or the risk management objective is changed or no longer expected to
be met. On such termination, accumulated gains or losses that were recognised into Hedge Fluctuation Reserve
are reclassified into Revenue Account / Profit & Loss Account.

B] Linked Business:

Valuation of Securities is in accordance with IRDAI directives issued from time to time.

7. Loans:

Loans are measured at historical cost subject to impairment provisions.

8. Fixed Assets:

a) Fixed assets are carried at cost (inclusive of taxes) less accumulated depreciation and impairment, if any.

b) Property under construction and amounts paid for the properties taken in possession, pending documentation, are
accounted under ‘House Property and Land’.

9. Depreciation/Amortisation:

Depreciation /amortisation on fixed assets is provided using the straight-line method, based on useful lives of assets as
estimated by the management. Depreciation is charged on monthly pro-rata basis for assets purchased/sold during the
year. All fixed assets costing upto '' 25000 each shall be capitalized and simultaneously depreciated fully to make the value
“NIL”.

Capital Work in Progress:

Costs of assets which are not ready for its intended use as at the date of Balance Sheet are presented as Capital Work-in
Progress.

10. Impairment of assets:

The carrying values of assets at each Balance Sheet date are reviewed for impairment. If any indication of such impairment
exists, the recoverable amounts of those assets are estimated and impairment is recognized, wherever necessary.

Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying
amount of an asset to the estimated current realizable value and value in use. If such assets are considered to be impaired,
the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds estimated
current realizable value of the asset or value in use.

The impairment for unlisted/thinly traded equity shares, preference shares and equity under affiliated investments as
assessed and accounted for in accordance with the Impairment Policy of the Corporation.

11. Liability for Life Policies:

The liability towards Policyholders as at Balance Sheet date is determined by the Corporation’s Appointed Actuary pursuant
to his annual investigation of the Corporation’s life insurance business.

12. Foreign Currency Transactions:

Transactions in foreign currencies are recorded at the exchange rates prevailing at the date of the transaction. Monetary
items in foreign currency, if any, are translated at the year-end closing rates. The resultant exchange gain or loss arising
on settlement/translation is recognized in the Revenue or Profit and Loss Account as applicable.

a) Life Fund relating to foreign business has been invested according to the statutory regulations of the respective
countries.

b) Financial Statements of branches in foreign countries as at the year end are prepared in accordance with local laws
and are translated at appropriate rates of exchange.

c) Exchange gains or losses arising on such conversions are recognised in the period in which they arise in the Revenue
Account.

d) Operations carried at foreign Branch Offices are of non integral nature. The Revenue A/c items are translated at the
average exchange rate and Balance Sheet items at closing rate.

Revaluation Exchange difference is accumulated in Foreign Exchange fluctuation Reserve under shareholders or
policyholders account as the case may be.

e) Investments made outside India by remittances sent from India are accounted for at original rupee cost or at the
earliest recorded rupee cost, where original cost is not available.

13. Asset Classification and Provisioning for Non-Performing Assets:

a) As per the guidelines issued to Insurance Companies by Insurance Regulatory and Development Authority of India,
Assets representing Loans, Debentures, Bonds and Mortgage Loans against House Property are classified based on
record of recovery as:

i) Standard

ii) Sub-standard

iii) Doubtful and

iv) Loss Assets

b) Provisioning for Non-Performing Loans, Debentures, Bonds and Mortgage Loans against House Property is made as
per the guidelines issued by Insurance Regulatory and Development Authority of India.

14. Benefits to employees:

a) Gratuity to employees is provided for (on the basis of Actuarial Valuation) through a Group Gratuity Insurance Policy
issued by the Corporation and as such, the liability in respect thereof, forms part of the Life Fund.

b) In respect of employees who have opted for Provident Fund Scheme, matching contribution is made to the Provident
Fund Trust formed under Life Insurance Corporation Act 1956.

c) In case of Defined Contribution Pension Scheme, the contributions are made when due and charged to Revenue
account during the period when related services are rendered.

In case of Defined Benefit Plan for employees who have opted for Pension Scheme, in lieu of Provident Fund Scheme,
the Corporation’s contribution is made to the Pension Fund Trust, in accordance with the Pension Rules notified by
the Government of India and the said contribution including past service contribution is made on the basis of Actuarial
calculation.

d) Leave Encashment Benefits on retirement are provided for ( on the basis of Actuarial Valuation) through a Group
Leave Encashment Insurance Policy issued by the Corporation and as such, the liability in respect thereof, forms part
of the Life Fund.

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Mar 31, 2024

(A) SIGNIFICANT ACCOUNTING POLICIES:

Corporate Information

Life Insurance corporation of India (“Corporation”) is a statutory corporation established on 1^st September, 1956, under the Life Insurance Corporation Act, 1956 (‘Governing Act’) engaged in the business of Life Insurance in and outside India. Corporation is governed by provisions of the governing Act; it is also registered with the Insurance Regulatory and Development Authority of India (‘IRDAI’), Registration No. 512 dated 01.01.2001 and is subject to such provisions of IRDA Act, 1999 as amended and regulations there under which are not inconsistent with the governing Act. The Corporation offers a range of individual and group insurance solutions including participating, non-participating and unit linked lines of businesses. The portfolio comprises of various insurance and investment products such as Protection, Pension, Savings, Investment, Annuity, Health and Variable. The equity shares of the Corporation are listed on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) (w.e.f. 17^th May, 2022).

1. Basis of Preparation:

The Financial Statements have been prepared under the historical cost convention, with fundamental accounting assumptions of going concern, consistency and accrual basis, unless otherwise stated. The accounting and reporting policies of the Corporation conform to accounting principles generally accepted in India (Indian GAAP), comprising regulatory norms and guidelines prescribed by the Life Insurance Corporation Act, 1956 (as amended), the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) Regulations, 2002 (“the Financial Statements Regulations”), the Master Circular on Preparation of Financial Statements and Filing of Returns of Life Insurance Business Ref No. IRDA/F&A/Cir/232/12/2013 dated December 11,2013 (“the Master Circular”) and other circulars issued by the IRDAI from time to time, provisions of the Insurance Act, 1938, as amended and in compliance with the Accounting Standards and in compliance with the Accounting Standards notified under Section 133 of the Companies Act, 2013, and amendments and rules made thereto, to the extent applicable.

2. Use of Estimates:

The preparation of Financial Statements is in conformity with generally accepted accounting principles in India (Indian GAAP), which requires the management to make estimates and assumptions that affect the reported amounts of income and expenses for the year, reported balances of assets and liabilities and disclosures relating to contingent liabilities as on the date of the Financial Statements. The estimates and assumptions used in the accompanying Financial Statements are based upon management’s evaluation of the relevant facts and circumstances up to and as on the date of the Financial Statements. Actual results may differ from the estimates. Any revision to the accounting estimates is accounted for prospectively.

3. Revenue Recognition:

Premium Income:-

a) Premiums are recognized as income when due, for which grace period has not expired and the previous installments have been paid. In case of Linked Business, the due date for payment is taken as the date when the associated units are created.

b) Income from linked funds which includes fund management charges, policy administration charges, mortality charges, etc. are recovered from linked fund in accordance with terms and conditions and recognized when due.

c) Premium ceded on re-insurance is accounted in accordance with the terms of the re-insurance treaty or in-principle arrangement with the re-insurer.

d) Interest income in respect of all government securities, debt securities including loans, debentures and bonds, Pass Through Certificate (PTC), mortgage loans is taken credit to the Revenue Account as per the guidelines issued by Insurance Regulatory and Development Authority.

e) In respect of purchase or sale of Government and other approved securities from secondary market, interest for the broken period is paid / received on cash basis.

f) Interest, Dividend, Rent, etc. are accounted at gross value (before deduction of Income Tax)

g) In respect of loans, debentures and bonds, accrued interest as at the date of the balance sheet is calculated as per method of calculation of simple interest mentioned in the loan document/information memorandum or such other document. In respect of Government and other approved securities and mortgage loans, accrued interest as at the date of balance sheet is calculated based on 360 days a year.

h) Profit or Loss on sale of Securities/Equities/ Mutual Fund is taken to Revenue only in the year of sale.

i) Dividend on quoted equity where right to receive the same has fallen due on or before 31^st March (i.e. dividend declared by the company) is taken as income though received subsequently. Dividend on unquoted equity is taken as income only on receipt.

j) Interest on policy loans is accounted for on accrual basis.

k) Rental income is recognized as income when due and rent/license fees which is in arrear for more than 6 months is not recognized as income. Upfront premium is accounted on cash basis.

l) Dividend on Preference shares/Mutual Fund is taken as income only on receipt.

m) Interest on application Money on purchase of debentures/bonds is accounted on cash basis.

n) Income on venture capital investment is accounted on cash basis.

o) Income from zero coupon bonds is accounted on accrual basis.

p) Outstanding interest on NPA’s as at balance sheet date is provided as interest suspense.

q) Premium on redemption/maturity is recognized as income on redemption/maturity.

r) Processing fee is accounted on receipt basis.

. Acquisition Costs:

Acquisition Costs are expensed in the period in which they are incurred. Acquisition costs are those costs that vary with

and are primarily related to the acquisition of new and renewal insurance contracts.

. Benefits Paid:

a) Claims costs consist of the policy benefit amount and claims settlement costs, wherever applicable.

b) The date of recognition of claim shall be the date of receipt of intimation of death or surrender by the policy holder. The date of recognition of claims in case of Maturity, Survival benefits, Annuity etc. shall be as per the terms and condition of the policies.

c) Repudiated claims disputed before judicial authorities are treated as contingent liability based on management prudence.

d) The provision is made for disputed legal cases pertaining to repudiated claims where decision is given against the Corporation by Lower Forum/Court to the extent of entire amount awarded by the Forum/Court against LIC, pending the Appeal/Writ/Revision filed by LIC.

A] Non Linked Business

a) Debt Securities including Government Securities and Redeemable Preference Shares are considered as ‘held to maturity’ and the value is disclosed at historical cost subject to amortization as follows:

(i) Debt Securities including Government Securities, where the book value is more than the face value, the premium will be amortized on straight line basis over the balance period of holding/maturity. Where face value is greater than book value, discount is accounted on maturity.

(ii) Listed Redeemable Preference Shares, where the book value is more than the face value, the premium is amortized on a straight line basis over the balance period of holding/maturity and are valued at amortised cost if last quoted price (not later than 30 days prior to valuation date), is higher than amortised cost. Provision for diminution is made if market value is lower than amortised cost.

Unlisted Redeemable Preference Shares where the book value is more than the face value, the premium is amortised on a straight line basis over the balance period of holding/maturity and are valued at amortised cost less provision for diminution.

Listed Irredeemable Preference Shares are valued at book value if last quoted price (not later than 30 days prior to valuation date), is higher than book value. In case last quoted price is lower, it is valued at book value less provision for diminution.

Unlisted Irredeemable Preference Shares are valued at book value less provision for diminution.

b) Listed equity securities that are traded in active Markets are measured at fair value on Balance Sheet date and the change in the carrying amount of equity securities is taken to Fair Value Change Account.

c) Unlisted equity securities and thinly traded equity securities are measured at historical cost less provision for diminution in the value of such investments. Such diminution is assessed and accounted for in accordance with the Impairment Policy of the Corporation. A security shall be considered as being thinly traded as per guidelines governing mutual funds laid down from time to time by SEBI.

d) All Investments are accounted on cash basis except for purchase or sale of equity shares & government securities from the secondary market.

e) The value of Investment Properties is disclosed at the Revalued amounts and the change in the carrying amount of the investment property is taken to Revaluation Reserve. Investment property is revalued at least once in every three years. The basis adopted for revaluation of property is as under:-

(i) The valuation of investment property is carried out by Rent Capitalization Method considering the market rent.

(ii) Investment properties having land alone without any building/structure is revalued as per current market value.

f) Mutual fund and Exchange Traded Fund (ETF) investments are valued on fair value basis as at the Balance Sheet date and the change in the carrying amount of mutual fund /ETF is taken to Fair Value Change Account.

g) Investments in subsidiary companies, joint ventures and associates are disclosed at cost.

h) Investment in venture fund / Alternative Investment Fund (AIF) is valued at cost wherever NAV is greater than the Book Value. Wherever NAV is lower than Book value the difference is accounted as diminution.

i) Money Market Instruments are measured at book value.

B] Linked Business:

Valuation of Securities is in accordance with IRDAI directives issued from time to time.

7. Loans:

Loans are measured at historical cost subject to impairment provisions.

8. Fixed Assets:

a) Values of the fixed assets are stated at cost (inclusive of taxes) less depreciation.

b) Property under construction and amounts paid for the properties taken in possession, pending documentation, are accounted under ‘House Property and Land’.

9. Depreciation/Amortisation:

Depreciation /amortisation on fixed assets is provided using the straight-line method, based on useful lives of assets as estimated by the management. Depreciation is charged on monthly pro-rata basis for assets purchased/sold during the year. Assets individually costing up to '' 5,000, being low value assets are fully charged to revenue in the year of purchase. Based on useful life evaluation carried out by the management, the rates of depreciation are as follows:-

Rates of Depreciation charged on Fixed Assets:

Sr. . _x Rate of

.. Asset

No. Depreciation

1 Furniture and fittings 10%

2 Refrigerators and water coolers, etc. 13.91%

3 Information Technology Equipment 30%

4 Vehicles 20%

5 Cycles 15%

6 Office Equipment 10%

7 Telephones, Fax/Epabx, Misc. Capital Equipment 10%

8 Communication equipments, Audio Visual & Allied equipment, Voltage stabilizers UPS 30%

9 Library Books and other publicity materials 20%

10 Engineering Department’s equipment costing over '' 5000/- 12.50%

11 House Property (Freehold) 2%

Pro rata based on

12 House Property and Land (Leasehold)

lease period

13 Ownership Flats purchased in Co-op Societies 2%

10. Impairment of assets:

The carrying values of assets at each Balance Sheet date are reviewed for impairment. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment is recognized, wherever necessary.

Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated current realizable value and value in use. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds estimated current realizable value of the asset or value in use.

The impairment for unlisted/thinly traded equity shares, preference shares and equity under affiliated investments as assessed and accounted for in accordance with the Impairment Policy of the Corporation.

11. Liability for Life Policies:

The liabilities towards Policyholders are determined by the Corporation’s Appointed Actuary pursuant to his annual investigation of the Corporation’s life insurance business.

12. Foreign Currency Transactions:

Transactions in foreign currencies are recorded at the exchange rates prevailing at the date of the transaction. Monetary items in foreign currency, if any, are translated at the year-end closing rates. The resultant exchange gain or loss arising on settlement/translation is recognized in the Revenue or Profit and Loss Account as applicable.

a) Life Fund relating to foreign business has been invested according to the statutory regulations of the respective countries.

b) Financial Statements of branches in foreign countries as at the year end are prepared in accordance with local laws and are translated at appropriate rates of exchange.

c) Exchange gains or losses arising on such conversions are recognised in the period in which they arise in the Revenue Account.

d) Operations carried out in Fiji, Mauritius and U.K. are of non integral nature. The Revenue A/c items are translated at the average exchange rate and Balance Sheet items at closing rate.

Revaluation Exchange difference is accumulated in Foreign Exchange fluctuation Reserve under shareholders or policyholders account as the case may be.

e) Investments made outside India by remittances sent from India are accounted for at original rupee cost or at the earliest recorded rupee cost, where original cost is not available.

13. Asset Classification and Provisioning for Non-Performing Assets:

a) Assets representing Loans, Debentures and Bonds and Mortgage Loans against House Property are classified based on record of recovery as:

i) Standard

ii) Sub-standard

iii) Doubtful and

iv) Loss Assets

As per the guidelines issued to Insurance Companies by Insurance Regulatory and Development Authority of India.

b) Provisioning for Non-Performing loans, debentures and bonds and Mortgage Loans against House Property is made as per the guidelines issued by Insurance Regulatory and Development Authority of India.

14. Benefits to employees:

a) Gratuity to employees is provided for (on the basis of Actuarial Valuation) through a Group Gratuity Insurance Policy issued by the Corporation and as such, the liability in respect thereof, forms part of the Life Fund.

b) In respect of employees who have opted for Provident Fund Scheme, matching contribution is made to the Provident Fund Trust formed under Life Insurance Corporation Act 1956.

c) In case of Defined Contribution Pension Scheme, the contributions are made when due and charged to Revenue account during the period when related services are rendered.

In case of Defined Benefit Plan for employees who have opted for Pension Scheme, in lieu of Provident Fund Scheme, the Corporation’s contribution is made to the Pension Fund Trust, in accordance with the Pension Rules notified by the Government of India and the said contribution including past service contribution is made on the basis of Actuarial calculation.

d) Leave Encashment Benefits on retirement are provided for ( on the basis of Actuarial Valuation) through a Group Leave Encashment Insurance Policy issued by the Corporation and as such, the liability in respect thereof, forms part of the Life Fund.

---

Mar 31, 2023

(A) SIGNIFICANT ACCOUNTING POLICIES:

Corporate Information

Life Insurance corporation of India (“Corporation”) is a statutory corporation established on 1st September, 1956, under the Life Insurance Corporation Act, 1956 (''Governing Act'') engaged in the business of Life Insurance in and outside India. Corporation is governed by provisions of the governing Act; it is also registered with the Insurance Regulatory and Development Authority of India (''IRDAI''), Registration No. 512 dated 01.01.2001 and is subject to such provisions of IRDA Act, 1999 as amended and regulations there under which are not inconsistent with the governing Act. The Corporation offers a range of individual and group insurance solutions including participating, non-participating and unit linked lines of businesses. The portfolio comprises of various insurance and investment products such as Protection, Pension, Savings, Investment, Annuity, Health and Variable. The equity shares of the Corporation are listed on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) (w.e.f. 17th May, 2022).

1. Basis of Preparation:

The Financial Statements have been prepared under the historical cost convention, with fundamental accounting assumptions of going concern, consistency and accrual basis, unless otherwise stated. The accounting and reporting policies of the Corporation conform to accounting principles generally accepted in India (Indian GAAP), comprising regulatory norms and guidelines prescribed by the Life Insurance Corporation Act, 1956 (as amended), the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor''s Report of Insurance Companies) Regulations, 2002 (“the Financial Statements Regulations”), the Master Circular on Preparation of Financial Statements and Filing of Returns of Life Insurance Business Ref No. IRDA/F&A/Cir/232/12/2013 dated December 11, 2013 (“the Master Circular”) and other circulars issued by the IRDAI from time to time, provisions of the Insurance Act, 1938, as amended and in compliance with the Accounting Standards and in compliance with the Accounting Standards notified under Section 133 of the Companies Act, 2013, and amendments and rules made thereto, to the extent applicable.

2. Use of Estimates:

The preparation of Financial Statements is in conformity with generally accepted accounting principles in India (Indian GAAP), which requires the management to make estimates and assumptions that affect the reported amounts of income and expenses for the year, reported balances of assets and liabilities and disclosures relating to contingent liabilities as on the date of the Financial Statements. The estimates and assumptions used in the accompanying Financial Statements are based upon management''s evaluation of the relevant facts and circumstances up to and as on the date of the Financial Statements. Actual results may differ from the estimates. Any revision to the accounting estimates is accounted for prospectively.

3. Revenue Recognition:

Premium Income :-

a) Premiums are recognized as income when due, for which grace period has not expired and the previous installments have been paid. In case of Linked Business, the due date for payment is taken as the date when the associated units are created.

b) Income from linked funds which includes fund management charges, policy administration charges, mortality charges, etc. are recovered from linked fund in accordance with terms and conditions and recognized when due.

c) Premium ceded on re-insurance is accounted in accordance with the terms of the re-insurance treaty or in-principle arrangement with the re-insurer.

Investment Income:-

d) Interest income in respect of all government securities, debt securities including loans, debentures and bonds, Pass Through Certificate (PTC), mortgage loans is taken credit to the Revenue Account as per the guidelines issued by Insurance Regulatory and Development Authority.

e) In respect of purchase or sale of Government and other approved securities from secondary market, interest for the broken period is paid / received on cash basis.

f) Interest, Dividend, Rent, etc. are accounted at gross value (before deduction of Income Tax)

g) In respect of loans, debentures and bonds, accrued interest as at the date of the balance sheet is calculated as

per method of calculation of simple interest mentioned in the loan document/information memorandum or such other

document. In respect of Government and other approved securities and mortgage loans, accrued interest as at the date

of balance sheet is calculated based on 360 days a year.

h) Profit or Loss on sale of Securities/Equities/ Mutual Fund is taken to Revenue only in the year of sale.

i) Dividend on quoted equity where right to receive the same has fallen due on or before 31st March (i.e. dividend

declared by the company) is taken as income though received subsequently. Dividend on unquoted equity is taken as income only on receipt.

j) Interest on policy loans is accounted for on accrual basis.

k) Rental income is recognized as income when due and rent/license fees which is in arrear for more than 6 months is not recognized as income. Upfront premium is accounted on cash basis.

l) Dividend on Preference shares/Mutual Fund is taken as income only on receipt.

m) Interest on application Money on purchase of debentures/bonds is accounted on cash basis.

n) Income on venture capital investment is accounted on cash basis.

o) Income from zero coupon bonds is accounted on accrual basis.

p) Outstanding interest on NPA''s as at balance sheet date is provided as interest suspense.

q) Premium on redemption/maturity is recognized as income on redemption/maturity

r) Processing fee is accounted on receipt basis.

4. Acquisition Costs:

Acquisition Costs are expensed in the period in which they are incurred. Acquisition costs are those costs that vary with and

are primarily related to the acquisition of new and renewal insurance contracts.

5. Benefits Paid:

a) Claims costs consist of the policy benefit amount and claims settlement costs, wherever applicable.

b) The date of recognition of claim shall be the date of receipt of intimation of death or surrender by the policy holder. The date of recognition of claims in case of Maturity, Survival benefits, Annuity etc. shall be as per the terms and condition of the policies.

c) Repudiated claims disputed before judicial authorities are treated as contingent liability based on management prudence.

d) The provision is made for disputed legal cases pertaining to repudiated claims where decision is given against the Corporation by Lower Forum/Court to the extent of entire amount awarded by the Forum/Court against LIC, pending the Appeal/Writ/Revision filed by LIC.

6. Investments:

A] Non Linked Business

a) Debt Securities including Government Securities and Redeemable Preference Shares are considered as ''held to maturity'' and the value is disclosed at historical cost subject to amortization as follows:

(i) Debt Securities including Government Securities, where the book value is more than the face value, the premium will be amortized on straight line basis over the balance period of holding/maturity. Where face value is greater than book value, discount is accounted on maturity.

(ii) Listed Redeemable Preference Shares, where the book value is more than the face value, the premium is amortized on a straight line basis over the balance period of holding/maturity and are valued at amortised cost if last quoted price (not later than 30 days prior to valuation date), is higher than amortised cost. Provision for diminution is made if market value is lower than amortised cost.

Unlisted Redeemable Preference Shares where the book value is more than the face value, the premium is amortised on a straight line basis over the balance period of holding/maturity and are valued at amortised cost less provision for diminution.

Listed Irredeemable Preference Shares are valued at book value if last quoted price (not later than 30 days prior to valuation date), is higher than book value. In case last quoted price is lower, it is valued at book value less provision for diminution.

Unlisted Irredeemable Preference Shares are valued at book value less provision for diminution.

b) Listed equity securities that are traded in active Markets are measured at fair value on Balance Sheet date and the change in the carrying amount of equity securities is taken to Fair Value Change Account.

c) Unlisted equity securities and thinly traded equity securities are measured at historical cost less provision for diminution in the value of such investments. Such diminution is assessed and accounted for in accordance with the Impairment Policy of the Corporation. A security shall be considered as being thinly traded as per guidelines governing mutual funds laid down from time to time by SEBI.

d) All Investments are accounted on cash basis except for purchase or sale of equity shares & government securities from the secondary market

e) The value of Investment Properties is disclosed at the Revalued amounts and the change in the carrying amount of the investment property is taken to Revaluation Reserve. Investment property is revalued at least once in every three years. The basis adopted for revaluation of property is as under:-

(i) The valuation of investment property is carried out by Rent Capitalization Method considering the market rent.

(ii) Investment properties having land alone without any building/structure is revalued as per current market value.

f) Mutual fund and Exchange Traded Fund (ETF) investments are valued on fair value basis as at the Balance Sheet date and the change in the carrying amount of mutual fund /ETF is taken to Fair Value Change Account.

g) Investments in subsidiary companies, joint ventures and associates are disclosed at cost.

h) Investment in venture fund / Alternative Investment Fund (AIF) is valued at cost wherever NAV is greater than the Book Value. Wherever NAV is lower than Book value the difference is accounted as diminution.

i) Money Market Instruments are measured at book value.

B] Linked Business:

Valuation of Securities is in accordance with IRDAI directives issued from time to time.

7. Loans:

Loans are measured at historical cost subject to impairment provisions.

8. Fixed Assets:

a) Values of the fixed assets are stated at cost (inclusive of taxes) less depreciation.

b) Property under construction and amounts paid for the properties taken in possession, pending documentation, are accounted under ''House Property and Land''.

9. Depreciation/Amortisation:

Depreciation /amortisation on fixed assets is provided using the straight-line method, based on useful lives of assets as estimated by the management. Depreciation is charged on monthly pro-rata basis for assets purchased/sold during the year. Assets individually costing up to Rs. 5,000, being low value assets are fully charged to revenue in the year of purchase. Based on useful life evaluation carried out by the management, the rates of depreciation are as follows:-

Rates of Depreciation charged on Fixed Assets

Sr. No.	Asset	Rate of Depreciation
1	Furniture and fittings	10%
2	Refrigerators and water coolers, etc.	13.91%
3	Information Technology Equipment	30%
4	Vehicles	20%
5	Cycles	15%
6	Office Equipment	10%
7	Telephones, Fax/Epabx, Misc. Capital Equipment	10%
8	Communication equipments, Audio Visual & Allied equipment, Voltage stabilizers UPS	30%
9	Library Books and other publicity materials	20%
10	Engineering Department''s equipment costing over ? 5000/-	12.50%
11	House Property (Freehold)	2%
12	House Property and Land (Leasehold)	Pro rata based on lease period
13	Ownership Flats purchased in Co-op Societies	2%

10. Impairment of assets:

The carrying values of assets at each Balance Sheet date are reviewed for impairment. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment is recognized, wherever necessary. Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated current realizable value and value in use. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds estimated current realizable value of the asset or value in use.

The impairment for unlisted/thinly traded equity shares, preference shares and equity under affiliated investments as assessed and accounted for in accordance with the Impairment Policy of the Corporation.

11. Liability for Life Policies:

The liabilities towards Policyholders are determined by the Corporation''s Appointed Actuary pursuant to his annual investigation of the Corporation''s life insurance business.

12. Foreign Currency Transactions:

Transactions in foreign currencies are recorded at the exchange rates prevailing at the date of the transaction. Monetary items in foreign currency, if any, are translated at the year-end closing rates. The resultant exchange gain or loss arising on settlement/translation is recognized in the Revenue or Profit and Loss Account as applicable.

a) Life Fund relating to foreign business has been invested according to the statutory regulations of the respective countries.

b) Financial Statements of branches in foreign countries as at the year end are prepared in accordance with local laws and are translated at appropriate rates of exchange except for Suva (Fiji) branch, for which the conversion is done at appropriate rates, from the financial statement as at 31st December, each year, since the accounts of the branch are prepared on calendar year basis.

c) Exchange gains or losses arising on such conversions are recognised in the period in which they arise in the Revenue Account.

d) Operations carried out in Fiji, Mauritius and U.K. are of non integral nature. The Revenue A/c items are translated at the average exchange rate and Balance Sheet items at closing rate. Revaluation Exchange difference is accumulated in Foreign Exchange fluctuation Reserve under shareholders or policyholders account as the case may be.

e) Investments made outside India by remittances sent from India are accounted for at original rupee cost or at the earliest recorded rupee cost, where original cost is not available.

13. Asset Classification and Provisioning for Non-Performing Assets:

a) Assets representing Loans, Debentures and Bonds and Mortgage Loans against House Property are classified based on record of recovery as:

i) Standard

ii) Sub-standard

iii) Doubtful and

iv) Loss Assets

As per the guidelines issued to Insurance Companies by Insurance Regulatory and Development Authority of India.

b) Provisioning for Non-Performing loans, debentures and bonds and Mortgage Loans against House Property is made as per the guidelines issued by Insurance Regulatory and Development Authority of India.

14. Benefits to employees:

a) Gratuity to employees is provided for (on the basis of Actuarial Valuation) through a Group Gratuity Insurance Policy issued by the Corporation and as such, the liability in respect thereof, forms part of the Life Fund.

b) In respect of employees who have opted for Provident Fund Scheme, matching contribution is made to the Provident Fund Trust formed under Life Insurance Corporation Act 1956.

c) In case of Defined Contribution Pension Scheme, the contributions are made when due and charged to Revenue account during the period when related services are rendered.

In case of Defined Benefit Plan for employees who have opted for Pension Scheme, in lieu of Provident Fund Scheme, the Corporation''s contribution is made to the Pension Fund Trust, in accordance with the Pension Rules notified by the Government of India and the said contribution including past service contribution is made on the basis of Actuarial calculation.

d) Leave Encashment Benefits on retirement are provided for ( on the basis of Actuarial Valuation) through a Group Leave Encashment Insurance Policy issued by the Corporation and as such, the liability in respect thereof, forms part of the Life Fund.

15. Provisions, Contingent Liabilities and Contingent Assets.

A Provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent liabilities (other than policies), if material, are disclosed by way of notes. Contingent assets are not recognized or disclosed in the financial statements.

16. Receipts and Payments Account:

Receipts and Payments Account is prepared and reported using the Direct Method in accordance with Para 2.2 of the Master Circular on Preparation of Financial Statements and Filing of Returns of Life Insurance Business Ref No. IRDA/F&A/ Cir/232/12/2013 dated December 11, 2013.

17. Taxation:

a) Direct Tax: Provision for income tax is made in accordance with the provisions of Section 44 of the Income Tax Act, 1961 read with Rules contained in the First Schedule and other relevant provisions of the Income Tax Act, 1961 as applicable for life insurance business.

b) Indirect Tax: The Corporation claims credit of goods and services tax on input services, which are set off against goods and services tax on output services.

Unutilized credits towards goods and services tax on input services are carried forward under ''Schedule 12 -Advances and Other Assets'' in the Balance Sheet, wherever there is reasonable certainty of utilization.

18. Borrowing Costs:

Borrowing costs include interest, commission/brokerage on deposits and exchange differences arising from foreign currency borrowings to the extent they are regarded as adjustment to interest cost.

19. Earnings per share:

Basic earnings per share is computed by dividing the net profit or loss after tax attributable to equity shareholders by weighted average number of equities shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit or loss after tax by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.

20. Segmental Reporting:

a) Identification of Segments:

Based on the primary segments identified under IRDA (preparation of Financial statements and auditors'' report of insurance Companies) regulations 2002 (''the regulations'') read with Accounting Standard 17 on “segmental reporting” notified under section 133 of the Companies act 2013 and rules there under, the Corporation has classified and disclosed segmental information separately for shareholders and policyholders. Accordingly the Corporation has prepared the Revenue Account and the Balance Sheet for the primary business segments namely Participating Life Individual, Participating Pension Individual, Participating Annuity Individual, Non Participating Life (Individual & Group), Non Participating Pension (Individual & Group), Non Participating Annuity Individual, Non Participating Variable individual, Non Participating Health individual, Non Participating Unit Linked and Capital Redemption and Annuity Certain Business (CRAC). The Corporation operates in various geographical segments.

b) Basis of allocation of expenditure to various segments of business:

Operating Expenses relating to life insurance business are allocated to Non-Linked Participating, Non-Linked NonParticipating, General Annuities, Pensions, Health, Group Business and Unit Linked Business on the basis of:

a. Expenses which are directly identifiable to the respective lines of business have been allocated to these lines of business on actual basis, and

b. Other expenses which are not directly identifiable to the respective lines of business are allocated out of the

common pool on the following basis or a combination of these:

i. Number of policies

ii. Total premium income

iii. Sum assured

Allocation of common expenses among various lines of business is based on the approved expense policy of the

Corporation.

21. Leases:

a) Operating Lease: Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the lease term are classified as operating lease. Operating lease rentals are recognized as an expense over the lease period on a straight-line basis.

Where the Corporation is the lessor, Assets subject to operating leases are included in fixed assets.Lease income is recognized in the Revenue/Profit and Loss Account on a straight-line basis over the lease term. Costs, including depreciation are recognised as expenses in the Revenue/ Profit and Loss Account.

b) Finance Lease: Leases under which the Corporation assumes substantially all the risks and the rewards of ownership of the asset are classified as finance lease. Such leased asset acquired are capitalised at fair value of the asset or present value of the minimum lease rental payment at the inception of the lease, whichever is lower.

22. Funds for future appropriations:

For Non- linked Participating business, the balance in the funds for future appropriations account represents funds, the allocation of which, either to participating ''Policy Holders'' or to ''Shareholders'', has not been determined at the Balance Sheet date. Transfers to and from the fund reflect the excess or deficit of income over expenses and appropriations in each accounting period arising in the Corporation''s ''Policy holders'' fund. In respect of participating policies any allocation to the policyholder would also give rise to a shareholder transfer in the required proportion.

The fund for future appropriations held in the Unit-Linked funds, represents surplus that has arisen from lapsed policies unlikely to be revived. This surplus is required to be held within the ''policyholders'' fund till the point at which the policyholders'' can no longer revive their policy.

23. Unclaimed amount of policyholders:

Assets held for unclaimed amount of policyholders are created and maintained in accordance with the requirement of Master circular on Unclaimed amount of Policyholders IRDA/F&A/CIR/Misc/282/ 11/2020 dated November 17, 2020 and Investment Regulations, 2016 as amended from time to time:

a) Assets of unclaimed amounts of policyholders are disclosed in Schedule 12 “Advances and Other Assets”, forming part of Balance Sheet. Corresponding income on unclaimed assets is shown under “Interest, Dividend & Rent- Gross” in Revenue Account.

b) Income earned on unclaimed amount of policyholders is accreted to respective unclaimed fund and is accounted for on an accrual basis.

c) Amounts remaining unclaimed for a period of 10 years along with all respective accretions to the fund are deposited into the Senior Citizen Welfare Fund (SCWF) as per requirement of IRDAI regulations.

24. Income arising from Available Solvency Margin (ASM) fund:

Income arising from Available Solvency Margin (ASM) fund, which is part of Non-Participating fund,is treated as Income of the respective accounting period under Non- Participating business. Consequently amount (net of Tax) pertaining to the accretion on the ASM has been transferred from Non- Participating to Shareholders Fund along with equal amount of Assets.

---

Mar 31, 2022

(A) SIGNIFICANT ACCOUNTING POLICIES:

Corporate Information

Life Insurance corporation of India ("Corporation") is a statutory corporation established on 1st September, 1956 under the Life Insurance Corporation Act, 1956 (''Governing Act'') engaged in the business of Life Insurance in and outside India. Corporation is governed by provisions of the governing Act; it is also registered with the Insurance Regulatory and Development Authority of India (''IRDAI''), Registration No. 512 dated 01.01.2001 and is subject to such provisions of IRDA Act, 1999 as amended and regulations there under which are not inconsistent with the governing Act. The Corporation offers a range of individual and group insurance solutions including participating, non-participating and unit linked lines of businesses. The portfolio comprises of various insurance and investment products such as Protection, Pension, Savings, Investment, Annuity, Health and Variable. The equity shares of the Corporation are listed on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) (w.e.f. 17th May, 2022).

1. Basis of Preparation:

The Financial Statements have been prepared under the historical cost convention, with fundamental accounting assumptions of going concern, consistency and accrual basis, unless otherwise stated. The accounting and reporting policies of the Corporation conform to accounting principles generally accepted in India (Indian GAAP), comprising regulatory norms and guidelines prescribed by the Life Insurance Corporation Act, 1956 (as amended), the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor''s Report of Insurance Companies) Regulations, 2002 ("the Financial Statements Regulations"), the Master Circular on Preparation of Financial Statements and Filing of Returns of Life Insurance Business Ref No. IRDA/F&A/Cir/232/12/2013 dated December 11 2013 ("the Master Circular") and other circulars issued by the IRDAI from time to time, provisions of the Insurance Act, 1938 as amended and in compliance with the Accounting Standards and in compliance with the Accounting Standards notified under Section 133 of the Companies Act, 2013 and amendments and rules made thereto, to the extent applicable.

2. Use of Estimates:

The preparation of Financial Statements is in conformity with generally accepted accounting principles in India (Indian GAAP), which requires the management to make estimates and assumptions that affect the reported amounts of income and expenses for the year, reported balances of assets and liabilities and disclosures relating to contingent liabilities as on the date of the Financial Statements. The estimates and assumptions used in the accompanying Financial Statements are based upon management''s evaluation of the relevant facts and circumstances up to and as on the date of the Financial Statements. Actual results may differ from the estimates. Any revision to the accounting estimates is accounted for prospectively.

3. Revenue Recognition:Premium Income:-

a) Premiums are recognized as income when due, for which grace period has not expired and the previous installments have been paid. In case of Linked Business, the due date for payment is taken as the date when the associated units are created.

b) Income from linked funds which includes fund management charges, policy administration charges, mortality charges, etc. are recovered from linked fund in accordance with terms and conditions and recognized when due.

c) Premium ceded on re-insurance is accounted in accordance with the terms of the re-insurance treaty or inprinciple arrangement with the re-insurer.

Investment Income:-

d) Interest income in respect of all government securities, debt securities including loans, debentures and bonds, Pass Through Certificate (PTC), mortgage loans is taken credit to the Revenue Account as per the guidelines issued by Insurance Regulatory and Development Authority.

e) In respect of purchase or sale of Government and other approved securities from secondary market, interest for the broken period is paid / received on cash basis.

f) Interest, Dividend, Rent, etc. are accounted at gross value (before deduction of Income Tax)

g) In respect of loans, debentures and bonds, accrued interest as at the date of the balance sheet is calculated as per method of calculation of simple interest mentioned in the loan document/information memorandum or such other document. In respect of Government and other approved securities and mortgage loans, accrued interest as at the date of balance sheet is calculated based on 360 days a year.

h) Profit or Loss on sale of Securities/Equities/ Mutual Fund is taken to Revenue only in the year of sale.

i) Dividend on quoted equity where right to receive the same has fallen due on or before 31st March (i.e. dividend declared by the company) is taken as income though received subsequently. Dividend on unquoted equity is taken as income only on receipt.

j) Interest on policy loans is accounted for on accrual basis.

k) Rental income is recognized as income when due and rent/license fees which is in arrear for more than 6 months is not recognized as income. Upfront premium is accounted on cash basis.

l) Dividend on Preference shares/Mutual Fund is taken as income only on receipt.

m) Interest on application Money on purchase of debentures/bonds is accounted on cash basis.

n) Income on venture capital investment is accounted on cash basis.

o) Income from zero coupon bonds is accounted on accrual basis.

p) Outstanding interest on NPA''s as at balance sheet date is provided as interest suspense.

q) Premium on redemption/maturity is recognized as income on redemption/maturity

r) Processing fee is accounted on receipt basis.

4. Acquisition Costs:

Acquisition Costs are expensed in the period in which they are incurred. Acquisition costs are those costs that vary

with and are primarily related to the acquisition of new and renewal insurance contracts.

5. Benefits Paid:

a) Claims costs consist of the policy benefit amount and claims settlement costs, wherever applicable.

b) The date of recognition of claim shall be the date of receipt of intimation of death or surrender by the policy holder. The date of recognition of claims in case of Maturity, Survival benefits, Annuity etc. shall be as per the terms and condition of the policies.

c) Repudiated claims disputed before judicial authorities are treated as contingent liability based on management prudence

d) The provision is made for disputed legal cases pertaining to repudiated claims where decision is given against the Corporation by Lower Forum/Court to the extent of entire amount awarded by the Forum/Court against LIC, pending the Appeal/Writ/Revision filed by LIC.

6. Investments:A] Non Linked Business

a) Debt Securities including Government Securities and Redeemable Preference Shares are considered as ''held to maturity'' and the value is disclosed at historical cost subject to amortization as follows:

(i) Debt Securities including Government Securities, where the book value is more than the face value, the premium will be amortized on straight line basis over the balance period of holding/maturity. Where face value is greater than book value, discount is accounted on maturity.

(ii) Listed Redeemable Preference Shares, where the book value is more than the face value, the premium

is amortized on a straight line basis over the balance period of holding/maturity and are valued at amortised cost if last quoted price (not later than 30 days prior to valuation date), is higher than amortised cost. Provision for diminution is made if market value is lower than amortised cost.

Unlisted Redeemable Preference Shares where the book value is more than the face value, the premium is amortised on a straight line basis over the balance period of holding/maturity and are valued at amortised cost less provision for diminution.

Listed Irredeemable Preference Shares are valued at book value if last quoted price (not later than 30 days prior to valuation date), is higher than book value. In case last quoted price is lower, it is valued at book value less provision for diminution.

Unlisted Irredeemable Preference Shares are valued at book value less provision for diminution.

b) Listed equity securities that are traded in active Markets are measured at fair value on Balance Sheet date and the change in the carrying amount of equity securities is taken to Fair Value Change Account.

c) Unlisted equity securities and thinly traded equity securities are measured at historical cost less provision for diminution in the value of such investments. Such diminution is assessed and accounted for in accordance with the Impairment Policy of the Corporation. A security shall be considered as being thinly traded as per guidelines governing mutual funds laid down from time to time by SEBI.

d) All Investments are accounted on cash basis except for purchase or sale of equity shares & government securities from the secondary market

e) The value of Investment Properties is disclosed at the Revalued amounts and the change in the carrying amount of the investment property is taken to Revaluation Reserve. Investment property is revalued at least once in every three years. The basis adopted for revaluation of property is as under:-

(i) The valuation of investment property is carried out by Rent Capitalization Method considering the market rent.

(ii) Investment properties having land alone without any building/structure is revalued as per current market value.

f) Mutual fund and Exchange Traded Fund (ETF) investments are valued on fair value basis as at the Balance Sheet date and the change in the carrying amount of mutual fund /ETF is taken to Fair Value Change Account.

g) Investments in subsidiary companies, joint ventures and associates are disclosed at cost.

h) Investment in venture fund / Alternative Investment Fund (AIF) is valued at cost wherever NAV is greater than the Book Value. Wherever NAV is lower than Book value the difference is accounted as diminution.

i) Money Market Instruments are measured at book value.

B] Linked Business:

Valuation of Securities is in accordance with IRDAI directives issued from time to time

7. Loans:

Loans are measured at historical cost subject to impairment provisions.

8. Fixed Assets:

a) Values of the fixed assets are stated at cost (inclusive of taxes) less depreciation.

b) Property under construction and amounts paid for the properties taken in possession, pending documentation, are accounted under ''House Property and Land''.

9. Depreciation/Amortisation:

Depreciation /amortisation on fixed assets is provided using the straight-line method, based on useful lives of assets as estimated by the management. Depreciation is charged on monthly pro-rata basis for assets purchased/ sold during the year. Assets individually costing up to Rs. 5000 being low value assets are fully charged to revenue in the year of purchase. Based on useful life evaluation carried out by the management, the rates of depreciation are as follows:-

Rates of Depreciation charged on Fixed Assets:
Sr. No.	Asset	Rate of Depreciation
A	Furniture and fittings
1	Furniture and fittings	10%
2	Refrigerators and water coolers, etc.	13.91%
3	Electric fittings and ceiling fans in rented premises	10%
4	Fans (table/pedestal) in rented/ Owned premises	10%
B	Information Technology Equipment
1	Electronic Computers/microprocessors Printers	30%
2	Software for microprocessors	30%
3	Cartridge tapes, cartridge discs	30%
C	Vehicles
1	Cycles	15%
2	Mobile Publicity Vans	20%
3	Staff Cars	20%
4	Jeeps	20%
5	Office Cars- Scheme VI	20%
D	Office Equipment
1	Canteen Equipment	10%
2	Accounting machines	30%
3	Addressograph, Adrema and Bradma Machines etc.	10%
4	Typewriters	10%
5	Duplicators	20%
6	Cheque Writers	10%
7	Franking machines	10%
8	Weighing Machines	10%
9	Comptometers, adding and calculating Machines	20%
E	Others
1	Telephones	10%
2	Fax/Epabx	10%
3	Mobile phones and other communication equipment	30%
4	Library Books	20%
5	Miscellaneous Capital Equipment	10%
6	Audio Visual & other Allied equipment	30%
7	Neon signs, Glow signs, Hoardings and other publicity materials	20%
8	Engineering Department''s equipment costing over '' 5000/-	12.50%
9	Voltage stabilizers and UPS	30%
10	Generators, DG sets in rented premises	30%
F	Land and Building
1	House Property and Land (Freehold)	2%
2	House Property and Land (Leasehold)	Pro rata based on lease period
3	Ownership Flats purchased in Co-op Societies	2%
4	Electrical Installations, fans, lifts and generators in House Property(Freehold & Leasehold)	10%

10. Impairment of assets:

The carrying values of assets at each Balance Sheet date are reviewed for impairment. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment is recognized, wherever necessary.

Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated current realizable value and value in use. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds estimated current realizable value of the asset or value in use.

The impairment for unlisted/thinly traded equity shares, preference shares and equity under affiliated investments as assessed and accounted for in accordance with the Impairment Policy of the Corporation.

11. Liability for Life Policies:

The liabilities towards Policyholders are determined by the Corporation''s Appointed Actuary pursuant to his annual investigation of the Corporation''s life insurance business.

12. Foreign Currency Transactions:

Transactions in foreign currencies are recorded at the exchange rates prevailing at the date of the transaction. Monetary items in foreign currency, if any, are translated at the year-end closing rates. The resultant exchange gain or loss arising on settlement/translation is recognized in the Revenue or Profit and Loss Account as applicable.

a) Life Fund relating to foreign business has been invested according to the statutory regulations of the respective countries.

b) Financial Statements of branches in foreign countries as at the year end are prepared in accordance with local laws and are translated at appropriate rates of exchange except for Suva (Fiji) branch, for which the conversion is done at appropriate rates, from the financial statement as at 31st December, each year, since the accounts of the branch are prepared on calendar year basis.

c) Exchange gains or losses arising on such conversions are recognised in the period in which they arise in the Revenue Account.

d) Operations carried out in Fiji, Mauritius and U.K. are of non integral nature. The Revenue A/c items are translated at the average exchange rate and Balance Sheet items at closing rate. Revaluation Exchange difference is accumulated in Foreign Exchange fluctuation Reserve under shareholders or policyholders account as the case may be.

e) Investments made outside India by remittances sent from India are accounted for at original rupee cost or at the earliest recorded rupee cost, where original cost is not available.

13. Asset Classification and Provisioning for Non-Performing Assets:

a) Assets representing Loans, Debentures and Bonds and Mortgage Loans against House Property are classified based on record of recovery as:

i) Standard

ii) Sub-standard

iii) Doubtful and

iv) Loss Assets

As per the guidelines issued to Insurance Companies by Insurance Regulatory and Development Authority of India.

b) Provisioning for Non-Performing loans, debentures and bonds and Mortgage Loans against House Property is made as per the guidelines issued by Insurance Regulatory and Development Authority of India.

14. Benefits to employees:

a) Gratuity to employees is provided for (on the basis of Actuarial Valuation) through a Group Gratuity Insurance Policy issued by the Corporation and as such, the liability in respect thereof, forms part of the Life Fund.

b) In respect of employees who have opted for Provident Fund Scheme, matching contribution is made to the Provident Fund Trust formed under Life Insurance Corporation Act 1956.

c) In case of Defined Contribution Pension Scheme, the contributions are made when due and charged to Revenue account during the period when related services are rendered.

In case of Defined Benefit Plan for employees who have opted for Pension Scheme, in lieu of Provident Fund Scheme, the Corporation''s contribution is made to the Pension Fund Trust, in accordance with the Pension Rules notified by the Government of India and the said contribution including past service contribution is made on the basis of Actuarial calculation.

d) Leave Encashment Benefits on retirement are provided for ( on the basis of Actuarial Valuation) through a Group Leave Encashment Insurance Policy issued by the Corporation and as such, the liability in respect thereof, forms part of the Life Fund.

15. Provisions, Contingent Liabilities and Contingent Assets.

A Provision is made based on a reliable estimate when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation. Contingent liabilities (other than policies), if material, are disclosed by way of notes. Contingent assets are not recognized or disclosed in the financial statements.

16. Receipts and Payments Account:

Receipts and Payments Account is prepared and reported using the Direct Method in accordance with Para 2.2 of the Master Circular on Preparation of Financial Statements and Filing of Returns of Life Insurance Business Ref No. IRDA/F&A/Cir/232/12/2013 dated December 11 2013.

17. Taxation:

a) Direct Tax: Provision for income tax is made in accordance with the provisions of Section 44 of the Income Tax Act, 1961 read with Rules contained in the First Schedule and other relevant provisions of the Income Tax Act, 1961 as applicable for life insurance business.

b) Indirect Tax: The Corporation claims credit of goods and Services tax on input services, which are set off against goods and services tax on output services.

Unutilized credits towards goods and services tax on input services are carried forward under ''Schedule 12 -Advances and Other Assets'' in the Balance Sheet, wherever there is reasonable certainty of utilization.

18. Borrowing Costs:

Borrowing costs include interest, commission/brokerage on deposits and exchange differences arising from foreign currency borrowings to the extent they are regarded as adjustment to interest cost.

19. Earnings per share:

Basic earnings per share is computed by dividing the net profit or loss after tax attributable to equity shareholders by weighted average number of equities shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit or loss after tax by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.

20. Segmental Reporting:

a) Identification of Segments:

Based on the primary segments identified under IRDA (preparation of Financial statements and auditors'' report of insurance Companies) regulations 2002 (''the regulations'') read with Accounting Standard 17 on "segmental reporting" notified under section 133 of the Companies act 2013 and rules there under, the Corporation has classified and disclosed segmental information separately for shareholders and policyholders. Accordingly the Corporation has prepared the Revenue Account and the Balance Sheet for the primary business segments namely Participating Life Individual, Participating Pension Individual, Participating Annuity Individual, Non Participating Life (Individual & Group), Non Participating Pension (Individual & Group), Non Participating Annuity Individual, Non Participating Variable individual, Non Participating Health individual, Non Participating Unit Linked. The Corporation operates in various geographical segments.

b) Basis of allocation of expenditure to various segments of business:

Operating Expenses relating to life insurance business are allocated to Non-Linked Participating, Non-Linked NonParticipating, General Annuities, Pensions, Health, Group Business and Unit Linked Business on the basis of:

a. Expenses which are directly identifiable to the respective lines of business have been allocated to these lines of business on actual basis, and

b. Other expenses which are not directly identifiable to the respective lines of business are allocated out of the common pool on the following basis or a combination of these:

i. Number of policies

ii. Total premium income

iii. Sum assured

Allocation of common expenses among various lines of business is based on the approved expense policy of the Corporation.

21. Leases:

a) Operating Lease: Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the lease term are classified as operating lease. Operating lease rentals are recognized as an expense over the lease period on a straight-line basis.

Where the Corporation is the lessor, Assets subject to operating leases are included in fixed assets. Lease income is recognized in the Revenue/Profit and Loss Account on a straight-line basis over the lease term. Costs, including depreciation are recognised as expenses in the Revenue/ Profit and Loss Account.

b) Finance Lease: Leases under which the Corporation assumes substantially all the risks and the rewards of ownership of the asset are classified as finance lease. Such leased asset acquired are capitalised at fair value of the asset or present value of the minimum lease rental payment at the inception of the lease, whichever is lower.

22. Funds for future appropriations:

For Non- linked Participating business, the balance in the funds for future appropriations account represents funds, the allocation of which, either to participating ''Policy Holders'' or to ''Shareholders'', has not been determined at the Balance Sheet date. Transfers to and from the fund reflect the excess or deficit of income over expenses and appropriations in each accounting period arising in the Corporation''s ''Policy holders'' fund. In respect of participating policies any allocation to the policyholder would also give rise to a shareholder transfer in the required proportion.

The fund for future appropriations held in the Unit-Linked funds, represents surplus that has arisen from lapsed policies unlikely to be revived. This surplus is required to be held within the ''policyholders'' fund till the point at which the policyholders'' can no longer revive their policy.

23. Unclaimed amount of policyholders:

Assets held for unclaimed amount of policyholders are created and maintained in accordance with the requirement

of Master circular on Unclaimed amount of Policyholders IRDA/F&A/CIR/Misc/282/ 11/2020 dated November 17

2020 and Investment Regulations, 2016 as amended from time to time:

a) Assets of unclaimed amounts of policyholders are disclosed in Schedule 12 "Advances and Other Assets", forming part of Balance Sheet. Corresponding income on unclaimed assets is shown under "Interest, Dividend & Rent- Gross" in Revenue Account.

b) Income earned on unclaimed amount of policyholders is accreted to respective unclaimed fund and is accounted for on an accrual basis.

c) Amounts remaining unclaimed for a period of 10 years along with all respective accretions to the fund are deposited into the Senior Citizen Welfare Fund (SCWF) as per requirement of IRDAI regulations.