INTRODUCTION OF LEGAL ENTITY IDENTIFIER FOR LARGE TRANSACTIONS
What is LEI?
The Legal Entity Identifier (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
Applicability of LEI
LEI has been introduced by the Reserve Bank in a phased manner for participants in the over the counter derivative and non-derivative markets as also for large corporate borrowers.
LEI system for all payment transactions of value ₹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).
Where to obtain?
The code can also be easily obtained from local operating units. These are accredited by the Global Legal Entity Identifier Foundation which also implements and supports the use of LEI.
The code in India can be obtained from the Legal Entity Identifier India Ltd. It is a subsidiary of Clearing Corporation of India Ltd. recognized by RBI.
Steps to obtain LEI
Step 1: Visit a legitimate LEI registration website in India, At this stage, you will be required to fill out your contact details as the applicant. The information here includes the address, name of the legally responsible person be it the director, CEO, or any other details
Step 2: Upload the relevant documentation and submit your LEI application form. Whatever you sent is cross-matched with that of India’s local companies registry to see if it is a match. If the company cannot be found, you will be required to provide supporting documentation for verification. If the entity has a parent company then additional information about the parent company has to be provided.
Step 3: After applying, choose your mode of payment and complete the application. One of the LEI worldwide team members reviews your submission then if all is well your code will be sent to your e-mail within a few hours.
Benefits of LEI
1. It provides a clear and speedy global business identification method
2. This unique code eliminates confusion where different businesses share a name
3. LEI for all the transactions above RS.50 crores will help banks and regulators in tracking large value transactions more closely
International business in India is swiftly becoming very lucrative. That means local businesses must position themselves strategically to benefit maximally from this trade. Obtaining the LEI code is one of the ways of positioning your business in the global arena.
Disclaimer:“Information contained herein is for informational purposes only and should not be used in deciding any particular case. The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Though utmost efforts have been made to provide authentic information, it is suggested that to have better understanding and obtaining professional advice after thorough examination of particular situation.”