India LEI regulations
LEI was introduced in India by the Reserve Bank in a phased manner for participants in over-the-counter (OTC) derivative and non-derivative markets and large corporate borrowers.
It is now mandatory that the LEI system be adopted for all payment transactions of value ₹50 crore and above handled by entities using the Reserve Bank’s Centralised Payment Systems, viz. Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).
This order was issued under Section 10 (2), read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), and will be effective from 1 April 2021.
Applicability
1. All Eligible Participants in the OTC Derivative markets
2. Large Corporate Borrowers
3. All Eligible Participants in Non- Derivative Market
Current LEI regulations for large corporate borrowers
Banks must now ask for an LEI from all large corporate borrowers. RBI has implemented a schedule to enforce the regulation in a phased manner. If the large corporate borrowers fail to provide an LEI, their credit facilities will not be renewed, nor will new credit be offered.
RBI also motivates requiring an LEI from the partner entities, parent entities, and subsidiaries of large corporate borrowers.
| Total Exposure to SCBs | To be completed by |
| ₹ 1000 crore and above | 30 June 2018 |
| Between ₹ 500 crore and ₹ 1000 crore | 31 March 2019 |
| Between ₹ 100 crore and ₹ 500 crore | 31 December 2019 |
| Between ₹ 50 crore and ₹ 100 crore | Dec 31, 2019 |
Current LEI regulations in non-derivative markets
Reserve Bank of India has required using an LEI in the markets regulated by RBI. All members, other than private individuals, transacting in the markets regulated by RBI will need to obtain the LEI in the given schedule below:
– Government securities market
– Money market -markets for any instrument with a maturity of one year or less)
– Nonderivative forex markets (settlement of instruments before the spot date)
If the entity fails to receive an LEI before the due date, it can not transact in these financial markets.
Schedule for implementation with 2019 update – RBI has updated and extended the deadline as shown:
| Phase | Net Worth of Entities | Current Deadline | Extended Deadline |
| Phase I | above Rs.10000 million | April 30, 2019 | December 31, 2019 |
| Phase II | between Rs.2000 million and Rs 10000 million | August 31, 2019 | December 31, 2019 |
| Phase III | up to Rs.2000 million | March 31, 2020 | March 31, 2020 |
How to obtain a Legal Entity Identifier (LEI)?
The best option for requesting an LEI in India is with the LEI Register. They offer the lowest cost (prices starting from ₹ 2980/ year), seamless company data autofill, and same-day delivery of the LEI.
What is a legal entity?
A legal entity is an organization or company with legal rights and responsibilities, including tax filings.
Private Limited Company, Public Company, Sole Proprietorship, One Person Company, Partnership, Limited Liability Partnership (LLP)
LEI meaning
The Legal Entity Identifier (LEI) is a 20-digit reference number used to uniquely identify parties in financial transactions worldwide, based on the ISO 17442 standard developed by the International Organization for Standardization (ISO). The code was introduced as a critical measure to improve the quality and precision of financial data systems for better risk management during the Global Financial Crisis. So, it’s essentially a business passport, which identifies your company and makes it possible to check if your counterpart is who they claims to be.
Who needs an LEI number?
LEI (The Legal Entity Identifier) will be issued to any legal identity, including but not limited to all
- Banks, lenders, and investment companies
- Commodities traders
- CFDs (Contracts For Differences)
- Entities listed on the stock exchange
- Financial intermediaries
- Investors in mutual funds and hedge funds
- Trade OTC derivatives
- Self-Managed Superannuation Fund traders and investors
- Pension schemes
- Any entity needing to comply with the SFTR (Securities Financing Transaction Regulation)
Check with a local Registration Agent if you are unsure about your need for an LEI.
LEI will be assigned on application from the legal entity and after due validation of data. For an organization, LEI will be
- Used as a means of identification for a financial entity
- Facilitate transaction reporting to Trade Repositories
- Ensure compliance with regulatory requirements
LEI number search and LEI lookup
An LEI consists of 20 characters and will be issued to each company once:
- The first 4 characters are unique to the LOU, which has issued the LEI.
- The 5th and 6th characters are the same – 0 for every company.
- The following 12 characters are letters and numbers unique for each company.
- The final 2 characters are known as the checking characters.
An LEI code search will reveal crucial information based on the entity’s ownership structure. As such, it can be used to establish ‘who is who’ and ‘who owns whom.’ Hence, essentially, an LEI search will provide you with access to a global directory of participants in the financial market.
Who is who, and who owns whom?
Level 1 data includes entity registration details (legal name, registration number, legal address, HQ address, etc).
Level 2 data provides information about an entity’s ownership structure and thus answers the question ‘who owns whom.’ Simply put the LEI data pool transfers unstructured entity registration data into a standardized global directory, which enhances transparency in the global marketplace.
