The Reserve Bank of India (RBI) on January 5, 2021 introduced the Legal Entity Identifier (LEI) for large value transactions over Rs 50 crore in Centralised Payment Systems.
- It will be effective from April 1, 2021.
- The 20-digit LEI number is 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.
- The LEI number will be mandatory for the transactions undertaken by entities (non-individuals) using Reserve Bank-run Centralised Payment Systems viz. Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).
- The LEI has been introduced in a phased manner for participants in over the counter (OTC) derivative and non-derivative markets as also for large corporate borrowers.
- Under the RBI’s new guidelines, member banks should advise entities who undertake large value transactions (Rs 50 crore and above) to obtain LEI in time, if they do not already have one.
(Source: RBI)
