What Is Legal Entity Identifier – Free PDF Download


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First things First

  • Starting from 1 October 2022, banks shall obtain LEI number from the resident entities (non-individuals) intending to undertake capital or current account transactions of ₹50 crore under FEMA, 1999.
  • Banks shall encourage such entities to voluntarily furnish LEI while undertaking the specified transactions even before 1 October 2022.
  • All single payment transactions of ₹50 crore and above undertaken by entities (non-individuals) should include remitter and beneficiary LEI information.
  • This is applicable to transactions undertaken through the NEFT and RTGS payment systems. LEI is not required for customer transactions where both remitter and beneficiary are individuals.

What is this LEI

  • Legal entity identifier is a 20-character, alpha-numeric code based on the ISO 17442 standard developed by the International Organization for Standardization.
  • It is a global identifier for entities participating in financial transactions. It is recognized under the Payment and Settlement Systems Act, 2007.

Who gives LEI & what’s its validity?

  • Global Legal Entity Identifier Foundation (GLEIF) regulates the entire LEI system throughout the world. It is based in Basel Switzerland.
  • However, GLEIF doesnot issue LEIs specifically. It gives accreditation to organization & institutions which can
  • There are a number of LEI issuers around the world that issue and maintain the identifiers and act as primary interfaces to the global directory.
  • LEIs are valid for one year from the date of registration which can be renewed yearly.

Who gives LEI & what’s its validity?

Why LEIs brought?

  • LEI were developed in light of the 2007-08 global financial recession.
  • At the time of the financial crisis of 2007–2008, regulators realised that a single identification code unique to each financial institution was not available worldwide.
  • It was realized that each country had different code systems to recognize the counterpart corporation of financial transactions. Hence, it was impossible to identify the transaction details of individual corporations, identify the counterpart of financial transactions, and calculate the total risk amount.
  • This resulted in difficulties in estimating risk exposure, analyzing risks across the market, and resolving the failing financial institutions. Consequently, in 2012 LEIs were introduced by G20.

Benefits of LEI

  • LEI will enhance transparency in global transactions. RBI bringing it in phased manner will avoid chaos and confusion & eventually contribute to ease in doing business encouraging foreign entities to invest more in Indian markets
  • For firms, LEI serves as a proof of identity & help to abide by regulatory requirements. It will also facilitate transaction reporting to Trade Repositories.
  • One of the key benefits of the Legal Entity Identifier is the annual renewal and verification of the data, ensuring trustworthy high quality data.




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