RBI has made mandatory LEI registration for all cross border transactions such as capital or current account transactions of INR 50 crore and above, w.e.f  1st October, 2022. Previously, LEI registration was made compulsory for all RTGS and NEFT transactions of INR 50 crore and above, w. e. f. 1st April 2021. RBI intends to broaden the horizon and implement LEI registrations in phases to include entities and transactions with much lower threshold, details provided in subsequent paras.

The concept of Legal Entity Identifier dates back to global financial crisis times of 2008, when the regulators worldwide acknowledged their inability to identify parties to transactions across markets, products, and regions. Subsequent to such events, the need for greater adoption of a publicly available, global directory was felt.

The data casted with the Legal Entity Identifier (in common parlance, termed as, LEI) aims to fulfil such requirements and hence can be regarded as a global directory to enhance greater transparency in the global marketplace.

In India, regulatory momentum pertaining to LEI issuance, continues to grow with the Reserve Bank of India (RBI) as an early supporter followed by the Securities Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority of India (IRDAI) also recognising the opportunity to benefit from the LEI.

Meaning

A LEI is a 20-character alpha numeric unique code recognised globally, allotted to any legal entity or structure that is party to a financial transaction, who may act so, in the capacity of a borrower, lender, market participant, financial and market regulator or a mutual fund / Alternative Investment Fund (AIF) and its schemes, etc. in any jurisdiction across the globe. The LEI connects key reference information for clear and unique identification of legal entities within the global financial system.

Purpose

Since, LEI is accepted worldwide, it facilitates identification and tracking of the flow of financial transaction right from the investment stage to its end use. It aims to identify and evaluate systemic and emerging risk, identify trends and take corrective steps in the global financial scenario.

As an LEI contains information about an entity’s ownership structure including parent company, the banks/public authorities can track all financial transactions against one LEI. Also, some international public authorities rely on the LEI to evaluate risk, take corrective steps and, if required, minimize market abuse and improve the accuracy of financial data.

In other words, LEI is the linchpin that connects the dots across the universe of entity identification of the digital era.

Notifications/circulars necessitating LEI registration

By RBI

Total Exposure of borrower LEI to be obtained on or before
Above ₹25 crore April 30, 2023
Above ₹10 crore, up to ₹25 crore April 30, 2024
₹5 crore and above, up to ₹10 crore April 30, 2025

By SEBI

By IRDAI 

Process of obtaining LEI

Any person can obtain LEI for any specified transaction either directly or through an intermediary. In case of direct application, such person needs to self- register in the online portal and designate an Authorised Signatory for correspondences and availing of the LEI in India. The subsequent steps involved in this process includes, payments of the prescribed fee and submission of the requisite documents. Approval of the LEI application is usually processed within 3 to 4 working days. To know more, please refer to the User Manual for New Registration.

Compliances

You may also like to read:

4
0
4
Oops. The page you're looking for doesn't exist.
Back Home