RBI amends Legal Entity Identifier guidelines; borrowers having total exposure of Rs. 5 crores or more to obtain LEI codes (RBI/2022-23/34 DOR.CRE.REC

The RBI has decided to extend the guidelines on Legal Entity Identifier (LEI) to Primary (Urban) Co-operative Banks (UCBs) and Non-Banking Financial Companies (NBFCs). Further, RBI advised that non-individual borrowers enjoying aggregate exposure of Rs. 5 crores and above from banks and financial institutions shall be required to obtain LEI codes as per the specified timelines. The RBI further clarified that Borrowers who fail to obtain LEI codes shall not be sanctioned any new exposure.

Exposure” for this purpose shall include 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. Lenders may ascertain the position of aggregate exposure based on information available either with them or CRILC database or declaration obtained from the borrower.”

This is with respect to the RBI notification* dated January 05, 2021, on "Introduction of Legal Entity Identifier for Large Value Transactions in Centralized Payment Systems". RBI has advised banks to introduce a Legal Entity Identifier for payment transactions of value ?50 crores and above. This will be effective from October 1, 2022.

What is LEI?

Legal Entity Identifier (LEI) is a 20-digit number used to identify parties to financial transactions worldwide. The regulator has introduced LEI to improve the quality and accuracy of financial data reporting systems for better risk management.

Under this process, all payment transactions (i.e., inward, and outward) of value ?50 crores and above undertaken by entities (non-individuals) through RTGS/NEFT should mandatorily include the remitter and beneficiary LEI information starting October 1, 2022.

What should you do?

Accordingly, you are required to obtain an LEI on or before October 1, 2022; if your payment transactions through RTGS/NEFT are of value ?50 crores and above. (Also, for all non-individual borrowers enjoying aggregate exposure of Rs. 5 crores and above from banks and financial institutions)

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 of India