The Reserve Bank of India (“RBI”), by way of its circular dated December 10, 2021 has introduced, legal entity identifier (“LEI”), a 20 (twenty) digit number to be used to uniquely identify parties to financial transactions worldwide for all category – I authorised dealer banks (“AD Category I Banks”) with the aim of improving the quality and accuracy of financial data systems.
The RBI has introduced LEI in a phased manner for participants in the over the counter derivative, non-derivative markets, large corporate borrowers and large value transactions in centralized payment systems. AD Category I Banks shall have to obtain LEI from the resident entities (non-individuals) undertaking capital or current account transactions of INR 50,00,00,000 (Rupees fifty crore) and above (per transaction) under Foreign Exchange Management Act, 1999, with effect from October 1, 2022. For non-resident counterparts/ overseas entities, AD Category I Banks will be allowed to process transactions even in case of non-availability of LEI to avoid disruptions. Once an entity has obtained LEI, it must be reported in all transactions of that entity, irrespective of transaction size.
In India, LEI can be obtained by entities from the website of Legal Entity Identifier India Limited (https://www.ccilindia-lei.co.in). Entities can also obtain LEI from any local operating units accredited by the Global Legal Entity Identifier Foundation (“GLEIF”). AD Category I Banks to have required systems in place to capture information pertaining to LEI and ensure that any LEI captured is validated against the global LEI database available on the website of GLEIF.
Please find a copy of the circular here.
This update has been contributed by Nidhi Arya (Partner) and Gayatri Dabir (Associate).
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