To improve the risk management in banking sector, RBI in its notification has provided that if the corporates need to borrow Rs 5 crore or more then it is mandatory to obtain 20-digit Legal Entity Identifier (LEI) unique code. LEI is the unique code to identify the parties to financial transactions.
RBI has also provided different timeline for obtaining the LEI by the corporates with different credit borrowings. Corporates with Rs 1000 crore fund and non-fund exposure are required to obtain the LEI code by the end of this financial year i.e., March 31, 2018 and corporates having exposure between Rs 500- 1000 crore have to obtain the code by June 30, 2018 and the corporates with exposure between Rs 100-500 crore to obtain the code by the end of next financial year i.e., March 31, 2019.
The corporates having credit borrowing exposure starting with Rs 50 crore have to compulsorily obtain the LEI code and the corporates with exposure of Rs 50-100 crore are required to obtain the code by end of December, 2019. In pursuance of the notification the central bank said that the borrowers who are not covered under the said notification will not be given renewal or enhancement of their existing credit facilities.
LEI can be obtained by the entities from any local operating units which are certified by Global Legal Entity Identifier Foundation (GLEIF). LEI will be assigned to legal entities including banks, financial institutions, intermediaries, companies, asset management companies, trust, holding and any other institution being a party to a financial transaction. However, the list is not exhaustive.
In India, LEI will be issued through Legal Entity Identifier India Limited, which is a wholly owned subsidiary of Clearing Corporation of India and it also acts as a local operating unit of GLEIF.
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