The Reserve Bank of India (RBI) has said that entities making transactions of Rs 50 crore and above using the RBI-run centralised payment systems Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) will have to quote the 20-digit unique Legal Entity Identifier (LEI) from April 1, 2021. The LEI is a 20-digit number used to uniquely identify parties to financial transactions worldwide. It was conceived as a key measure to improve the quality and accuracy of financial data systems for better risk management post the global financial crisis.
LEI has been introduced by the Reserve Bank in a phased manner for participants in the over the counter (OTC) derivative and non-derivative markets as also for large corporate borrowers. The central bank said ‘It has now been decided to introduce the LEI system for all payment transactions of value Rs 50 crore and above undertaken by entities (non-individuals) using Reserve Bank-run Centralised Payment Systems viz. RTGS and NEFT’. It added that the directions shall be effective from April 1, 2021.
In preparation for the wider introduction of LEI across all payment transactions, RBI has asked the banks concerned to advise entities who undertake large value transactions to obtain LEI in time, if they do not already have one. Banks have also been asked to maintain records of all transactions of Rs 50 crore and above through RTGS and NEFT. Entities can obtain LEI from any of the Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF), the body tasked to support the implementation and use of LEI. 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 under the Payment and Settlement Systems Act, 2007.