The Reserve Bank of India vide its notification dated 5th January 2020 has introduced a legal entity identifier which is a 20 digit number used to uniquely identify parties to financial transactions worldwide. It is conceived as a key measure to improve the quality and accuracy of financial data systems for better risk management post the Global Financial Crisis.
RBI has decided to introduce the 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).
The member banks shall advise entities who undertake large value transactions (₹50 crore and above) to obtain LEI in time, if they do not already have one and shall include remitter and beneficiary LEI information in RTGS and NEFT payment messages.
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) (https://www.ccilindia-lei.co.in), which is also recognized as an issuer of LEI by the Reserve Bank under the Payment and Settlement Systems Act, 2007.
The Above directions shall be in force from 1st April 2021.
