The Reserve Bank of India December 5 introduced an identification number called the Legal Entity Identifier (LEI) to track all financial transactions exceeding Rs 50 crore. This will be effective from April 1, 2021.
The 20-digit LEI number is used to uniquely identify parties to financial transactions worldwide while improving the quality and accuracy of financial data systems for better risk management post the global financial crisis.
"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. Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT)," the RBI notification said.
The apex bank regulator mentioned that 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.
Apart from this, member banks should include remitter and beneficiary LEI information in RTGS and NEFT payment messages. Also, they should maintain records of all transactions of Rs 50 crore and above through RTGS and/or NEFT.
Those seeking to obtain an LEI can reach out to any Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF). In India, RBI has given the permit to Legal Entity Identifier India (LEIL) (https://www.ccilindia-lei.co.in) to issue LEI under the Payment and Settlement Systems Act, 2007.
Providing other details, RBI clarified that on the point of bank customers who must obtain LEI. As per RBI, all non-individual customers initiating or receiving transactions of Rs 50 crore and above through RTGS and/or NEFT must obtain LEI.Also, RBI said that LEI information should be provided in the ‘Remittance information’ field for RTGS customer payment transactions. While for NEFT outward debit messages, LEI information should be provided in the ‘Sender to Receiver Information’ field.