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India LEI regulations

New LEI regulation for payments…

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).

Issued under Section 10 (2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007) and will be effective from April 1, 2021.

Reserve Bank of India

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 are now required to 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 it’s credit facilities will not be renewed nor new credit offered.
RBI also motivates to require an LEI from the partner entities, parent entities and subsidiaries of the large corporate borrowers.

 

Total Exposure to SCBs To be completed by
₹ 1000 crore and above Mar 31, 2018
Between ₹ 500 crore and ₹ 1000 crore Jun 30, 2018
Between ₹ 100 crore and ₹ 500 crore Mar 31, 2019
Between ₹ 50 crore and ₹ 100 crore Dec 31, 2019

 


Current LEI regulations in non-derivative markets

Reserve Bank of India has required the use of 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)
– Non derivative forex markets (settlement of instruments before the spot date)

If the entity fails to receive an LEI before the due date, they 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

The RBI issued statement


How to obtain a legal entity identifier (LEI)?

The best option for requesting an LEI in India is with LEI Register. Offering the lowest cost (prices starting from ₹ 2980/ year) and seamless company data autofill and same-day delivery of the LEI.

REGISTER

What is legal entity?

A legal entity is an organisation or company that has 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 better the quality and precision of financial data systems for better risk management post 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’re claiming 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 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 organisation, LEI will be

  1. Used as a means of identification for a financial entity
  2. Facilitate transaction reporting to Trade Repositories
  3. 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 consist of letters and numbers and are 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 ownership structure of the entity. 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 that exist within the financial market.

LEVEL 1 – “who is who”            LEVEL 2 – “who owns whom.”

Level 1 data includes entity registration details, like a legal name, number of registration, legal address, HQ address etc.
Level 2 data provides information about an entity’s ownership structure, thus answers the question who owns whom. To put it simply, the available LEI data pool transfers unstructured entity registration data into a standardised global directory, which greatly enhances transparency in the global marketplace.