RBI mandates ‘Legal Entity Identifier’ for Rs. 50 crore plus cross-border deals

Circular No. RBI/2021-22/137 A.P. (DIR Series) Circular No. 20, Dated 10-12-2021

The Reserve Bank of India has made the ‘Legal Entity Identifier’ (LEI) mandatory for cross-border transactions for capital or current account transactions worth Rs 50 crore and above. LEI is a 20-digit number used to uniquely identify parties to financial transactions worldwide to improve the quality and accuracy of financial data systems.

LEI norm has been introduced in a phased manner for participants in the over-the-counter (OTC) derivative, non-derivative markets, large corporate borrowers, and large value transactions in centralized payment systems. From October 1, 2022, AD Category I banks, shall obtain the LEI number from the resident entities (non-individuals) undertaking capital or current account transactions of ?50 crores and above per transaction under FEMA, 1999.

Once an entity has obtained an LEI number, it must be reported in all transactions of that entity, irrespective of transaction size. AD Category-I banks shall have the required systems in place to capture the LEI information and ensure that any LEI captured is validated against the global LEI database available on the website of the Global Legal Entity Identifier Foundation (GLEIF).

In India, LEI can be obtained from Legal Entity Identifier India Ltd. (LEIL), which is also recognized as an issuer of LEI by the Reserve Bank under the Payment and Settlement Systems Act, 2007. The rules, procedures, and documentation requirements may be ascertained from LEIL.

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