RBI demands borrowers with total exposure of ₹5 crore and above to obtain LEI
The Reserve Bank of India (RBI) has come out with a timeline for non-individual borrowers who aggregate exposure of ₹5 crore and above from banks and financial institutions to obtain Legal Entity Identifier (LEI) codes.
LEI is a 20-digit unique code that identifies parties to financial transactions on a global scale. LEI’s objective is to be a key measure in improving the quality and accuracy of financial data systems for better risk management following the 2008 Global Financial Crisis.
- According to the timeline, first in line are borrowers with a total exposure above ₹25 crore, who’ll need to obtain an LEI by April 30, 2023.
- This will be followed for borrowers with a total exposure above ₹10 crore and up to ₹25 crore – who’ll need to obtain LEI by April 30, 2024.
- Last in line are borrowers with a total exposure of 5 crore and above, and up to ₹10 crore who’ll need to obtain LEI before April 30, 2025.
The central bank has emphasized that borrowers who fail to obtain LEI codes shall not be sanctioned any new exposure nor shall they be granted renewal/enhancement of any existing exposure.
Extension of guidelines
“On a review, it has been decided that the guidelines on LEI stand extended to primary (urban) co-operative banks (UCBs) and NBFCs.
“It is further advised that non-individual borrowers enjoying aggregate exposure of ₹5 crore and above from banks and financial institutions shall be required to obtain LEI codes,”- RBI circular.
However, exemptions include departments/agencies of Central and State governments (not PSUs registered under Companies Act or established as corporation under the relevant statute). In the current statement, “banks” include scheduled commercial banks (excluding regional rural banks), local area banks, small finance banks, and primary (urban) co-operative banks.
Additionally, “financial institutions” include Exim Bank, SIDBI, NHB, NABARD, NaBFID, and NBFCs.
In 2017, RBI had prescribed a timeline for corporate borrowers having aggregate fund-based and non-fund-based exposure of ₹50 crore and above from any bank to obtain LEI registration and capture the same in the Central Repository of Information on Large Credits (CRILC). “This will facilitate assessment of aggregate borrowing by corporate groups, and monitoring of the financial profile of an entity/group,” the central bank had said then.
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