Global Legal Entity Identifier Foundation (GLEIF), a not for profit organisation headquartered in Basel, Switzerland, was established in the year 2014 to support the implementation and use of the legal entity identifier (LEI) across the globe.
The LEI is a 20-character, alpha-numeric code based on the ISO 17442 standard developed by the International Organization for Standardization (ISO). LEI is used to uniquely identify and link parties to financial transactions worldwide, thereby increasing transparency to manage counterparty risk involved in such financial transactions.
Eligibility criteria for entities to obtain LEI
The following entities are required to obtain a LEI in terms of the various notifications issued by the Reserve Bank of India:
| S.No. | Entity | Criteria | Notification |
| All participants in the Over-the-Counter (OTC) markets for Rupee Interest Rate derivatives, foreign currency derivatives and credit derivatives in India | All current and future participants would be required to obtain the unique LEI code | June 1, 20171 | |
| Large corporate borrowers of Banks | Total exposures of ₹ 50 crore and above to obtain LEI | November 2, 20172 | |
| Banks should encourage large borrowers to obtain LEI for their parent entity as well as all subsidiaries and associates. | |||
| a) Participants 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)3; and | a) All non-individual participants; and
|
November 29, 20184 | |
| b) In case of non-derivative forex transactions.
|
b) Client transaction involving an amount equivalent to or exceeding USD $1 million or equivalent thereof in other currencies. | ||
| All insurers and their large corporate borrowers | Corporate borrowers having total exposure of INR 50 crore and above | June 5,20205 | |
| All payment transactions of value INR 50 crore and
above undertaken by entities (non-individuals) using Reserve
Bank-run centralised payment systems viz. real time gross
settlement (RTGS) and national electronic funds transfer (NEFT)
|
All non-individual customers initiating or receiving transaction of INR 50 crore and above through RTGS and / or NEFT | January 5, 20216 |
Procedure to obtain LEI in India
LEI can be obtained from any of the Local Operating Units (LOUs) accredited by the GLEIF. In India, LEI can be obtained from Legal Entity Identifier India Ltd. (LEIL), which is also recognised as an issuer of LEI by the Reserve Bank.
Validity of LEI
An LEI is valid for one year from the date of issuance/last renewal date.
Conclusion
The ultimate objective of introduction of this framework is to monitor the high volume financial transactions and identify the parties participating in such transactions, at the global level, for better risk management and to address the global financial crisis.
Footnotes
1. https://rbi.org.in/Scripts/NotificationUser.aspx?Id=10988&Mode=0.
2. https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=11154.
3. Transactions undertaken on recognized stock exchanges are outside the purview of the LEI requirement.
4. https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=11424.
5. https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo4145&flag=1
6. https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=12010.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
