Skip to main content

What is Legal Entity Identifier (LEI)?

Quoting Legal Entity Identifier (LEI) code has become mandatory for various kinds of large value financial transactions. What is LEI?

What is Legal Entity Identifier (LEI)?

LEI is a 20-character unique identity code assigned to entities who are parties to a financial transaction.

Legal Entity Identifier (LEI) code has been conceived of as a key measure to improve the quality and accuracy of financial data systems for better risk management post the Global Financial Crisis. 

From where can LEI code be obtained?

Entities can obtain LEI from any of the Local Operating Units (LOUs) accredited by Global Legal Entity Identifier Foundation (GLEIF) – the entity tasked to support the implementation and use of LEI. 

In India, LEI code may be obtained from Legal Entity Identifier India Ltd. (LEIL), a subsidiary of Clearing Corporation of India Ltd. (CCIL), which has been recognised by Reserve Bank of India (RBI) as issuer of LEI under Payment and Settlement Systems Act, 2007 and is accredited by GLEIF as LOU in India for issuance and management of LEI.

Who shall obtain LEI code?

1. OTC derivatives markets 

All participants (other than individuals) in Over-the-Counter (OTC) markets for Rupee Interest Rate derivatives, foreign currency derivatives and credit derivatives in India need to obtain the unique LEI code. 

2. Large corporate borrowers 

Large corporate borrowers having total exposures of ₹50 crore and above need to obtain LEI code, without which they are not to be granted renewal / enhancement of credit facilities. 

3. Participation in non-derivative markets 

All participants (other than individuals) undertaking transactions in the markets regulated by RBI viz., Government securities markets, money markets and non-derivative forex markets (transactions that settle on or before the spot date) need to obtain LEI codes. Transactions undertaken on recognized stock exchanges are outside the purview of LEI requirement. In case of non-derivative forex transactions, while all inter-bank transactions are subject to LEI requirement, client transactions require LEI code for transactions involving an amount equivalent to or exceeding USD 1 million or equivalent thereof in other currencies.

4. Large Value Transactions in Centralised Payment Systems 

With effect from April 01, 2021, all payment transactions of value ₹50 crore and above undertaken by entities (non-individuals) using RBI-run Centralised Payment Systems viz. RTGS and NEFT need to mention LEI code.

5. Cross-border Transactions 

AD Category-I banks, with effect from October 1, 2022, shall obtain LEI number from resident entities (non-individuals) undertaking capital or current account transactions of ₹50 crore and above (per transaction) under FEMA, 1999. Once an entity has obtained LEI number, it must be reported in all transactions of that entity, irrespective of transaction size.

6. Borrowers 

Non-individual borrowers enjoying aggregate exposure of ₹5 crore and above from banks and financial institutions shall obtain LEI codes as per the timeline given below –

Total ExposureLEI to be obtained on or before
Above ₹25 croreApril 30, 2023
Above ₹10 crore, up to ₹25 croreApril 30, 2024
₹5 crore and above, up to ₹10 croreApril 30, 2025

Banks – Scheduled Commercial Banks (excluding RRBs), Local Area Banks, Small Finance Banks and UCBs.

Financial Institutions (FIs) – All India Financial Institutions (Exim Bank, SIDBI, NHB, NABARD and NaBFID) and NBFCs (including HFCs).

Exposure – all fund based and non-fund based (credit as well as investment) exposure of banks / FIs to the borrower. Aggregate sanctioned limit or outstanding balance, whichever is higher, shall be reckoned for the purpose.

Borrowers who fail to obtain LEI codes from an authorized Local Operating Unit (LOU) shall not be sanctioned any new exposure nor shall they be granted renewal / enhancement of any existing exposure. However, Departments / Agencies of Central and State Governments (not Public Sector Undertakings registered under Companies Act or established as Corporation under the relevant statute) are exempted from this provision.


References

Reserve Bank of India. (2017, November 02). 'Introduction of Legal Entity Identifier for large corporate borrowers'. Retrieved from https://rbi.org.in/Scripts/NotificationUser.aspx?Id=11154&Mode=0

Reserve Bank of India. (2017, June 01). 'Introduction of Legal Entity Identifier for OTC derivatives markets'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10988&Mode=0

Reserve Bank of India. (2018, November 29). 'Legal Entity Identifier Code for participation in non-derivative markets'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11424&Mode=0

Reserve Bank of India. (2021, August 12). 'FAQ-Legal Entity Identifier (LEI) for Large Value Transactions in Centralised Payment Systems'. Retrieved from https://www.rbi.org.in/Scripts/FAQView.aspx?Id=140

Reserve Bank of India. (2021, December 10). 'Introduction of Legal Entity Identifier for Cross-border Transactions'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12206&Mode=0

Reserve Bank of India. (2021, January 05). 'Introduction of Legal Entity Identifier for Large Value Transactions in Centralised Payment Systems'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12010&Mode=0

Reserve Bank of India. (2022, April 21). 'Legal Entity Identifier (LEI) for Borrowers'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12301&Mode=0

Reserve Bank of India. (2026, March 27). 'Master Direction - Reserve Bank of India (Unique Identifiers in Financial Markets) Directions, 2026'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13343&Mode=0


Follow at - Telegram   Instagram   LinkedIn   Twitter

Labels:

Comments

Post a Comment

Popular Posts

Trade Receivables Discounting System (TReDS)

Reserve Bank of India (RBI) has issued the directions on Trade Receivables Discounting System (TReDS). What is TReDS? TReDS is a technology platform on a digital or electronic network for facilitating factoring of trade receivables through multiple financiers. What is a Factoring Unit? Factoring unit refers to trade receivable in the form of invoice / bill uploaded either by the seller (in the case of factoring) or by the buyer (in case of reverse factoring), as the case may be. Who are the participants in TReDS? Seller – Micro, Small and Medium Enterprise (MSME) Buyer – any person liable to the seller, whether under a contract or otherwise, against an invoice or bill of exchange, to pay any trade receivable Financier – all entities / institutions permitted to undertake factoring business under the Factoring Regulation Act, 2011 Insurance companies  Credit Guarantee Fund Trust notified by the Government of India Who can operate TReDS platforms? An entity shall seek authorisation fr...
Post a Comment
Read more

Payment of Agency Commission to Agency Banks (ABs) and Disbursement of Government Pension by ABs

Reserve Bank of India (RBI) has issued guidelines on the conduct of Government business by Agency Banks (ABs), payment of agency commission to ABs and disbursement of Government pension by ABs. Who are ABs? ABs mean all Public Sector Banks (PSBs), scheduled Private Sector Banks (PVBs), scheduled Payments Banks (PBs), and scheduled Small Finance Banks (SFBs) appointed by the RBI under Section 45 of the RBI Act, 1934, by mutual agreement, to carry out Government banking business of the Central Government (CG) / State Governments (SGs). What is agency commission? Agency commission means the remuneration paid by the RBI to an AB in consideration of it acting as an agent of the RBI in the conduct of general banking business of the CG and the SGs at the places and in the manner specified in the agreement between the RBI and the bank, with the exception of the functions relating to the management of the public debt. What are the guidelines on appointment of ABs? Any eligible bank which intend...
Post a Comment
Read more

Kisan Credit Card (KCC) Scheme

Reserve Bank of India (RBI) has issued directions on Kisan Credit Card (KCC) Scheme. To whom are the directions applicable? The directions are applicable to the following entities – Commercial Banks (excluding overseas branches of Indian banks) Small Finance Banks (SFBs) Regional Rural Banks (RRBs) Rural Co-operative Banks – State Co-operative Banks (StCBs) Central Co-operative Banks (CCBs) To which loans shall the directions be applicable? The directions shall be applicable to loans sanctioned under the KCC Scheme with effect from January 01, 2027.  What are the crop seasons? Crop season means the period up to harvesting and marketing of the crops raised. Short duration crops shall mean crops with anticipated period from sowing to marketing up to 12 months. Long duration crops mean crops which are not short duration crops. The crop season for long duration crops i.e., anticipated period from sowing to marketing is more than 12 months and up to 18 months. For the purpose of the KCC...
Post a Comment
Read more

Lead Bank Scheme (LBS)

Reserve Bank of India (RBI) has issued guidelines on the Lead Bank Scheme (LBS). Who is a Lead Bank? RBI designates a commercial bank as Lead Bank in each district, to coordinate the efforts of the banks, Government, National Bank for Agriculture and Rural Development (NABARD) and other stakeholders at the district level to improve credit flow to the priority sectors and promote financial inclusion in the district. 12 public sector banks and 2 private sector banks (Jammu & Kashmir Bank and ICICI Bank) have been assigned lead bank responsibilities, covering 778 districts across the country. What appointments are made under the LBS? Every lead bank shall appoint a Lead District Manager (LDM) in each district where it has the lead bank responsibility, to exclusively oversee and coordinate the implementation of the LBS in the district. NABARD shall appoint a District Development Manager (DDM) for each district to act as a liaison between NABARD and the district-level banking and financ...
Post a Comment
Read more

Credit Derivatives

Reserve Bank of India (RBI) has issued directions on credit derivatives. What is Credit Derivative? Credit derivative means a derivative contract whose value is derived from the credit risk of an underlying debt instrument or an index of underlying debt instruments. What is Credit Default Swap (CDS) and Total Return Swap (TRS)? Credit Default Swap (CDS) means a credit derivative contract in which one counterparty (protection seller) commits to pay to the other counterparty (protection buyer) in the case of a credit event with respect to a reference entity and in return, the protection buyer makes periodic payments (premium) to the protection seller until the maturity of the contract or the credit event, whichever is earlier. Total Return Swap (TRS) means a credit derivative contract under which one counterparty (total return payer) commits to transfer the entire economic performance of a reference asset to the other counterparty (total return receiver), and, in return, receives a pre-d...
Post a Comment
Read more