RBI asked Banks to obtain Legal Entity Identifier from Large Corporate Borrowers

The Reserve Bank of India on Thursday asked banks to advise their existing large corporate borrowers having total exposures of ₹50 crore and above to obtain Legal Entity Identifier (LEI) code as per the schedule prescribed by it.

The RBI warned that borrowers who do not obtain LEI, which is a 20-digit unique code to identify parties to financial transactions worldwide, as per the schedule, are not to be granted renewal/enhancement of credit facilities.

According to the central bank’s schedule, corporates having exposure totalling ₹1,000 crore and above to scheduled commercial banks (SCBs) are required to obtain LEI by March 31, 2018.

LEI has been conceived as a key measure to improve the quality and accuracy of financial data systems for better risk management post the global financial crisis.

Corporates having exposure of between ₹500 crore and ₹1,000 crore, and between ₹100 crore and ₹500 crore to SCBs are required to obtain LEI by June 30, 2018, and March 31, 2019, respectively.

Corporates having exposure of between ₹50 crore and ₹100 crore to SCBs are required to obtain LEI by December 31, 2019.

The RBI said a separate roadmap for borrowers having exposure between ₹5 crore and up to ₹50 crore would be issued in due course. It added that banks should encourage large borrowers to obtain LEI for their parent entity as well as all subsidiaries and associates. In its ‘Statement on Developmental and Regulatory Policies’, issued on October 4, 2017, the RBI said it has been decided to require banks to make it mandatory for corporate borrowers having aggregate fund-based and non-fund based exposure of ₹5 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. This requirement will be implemented in a calibrated, but time-bound manner….,” the RBI then said.

Entities can obtain LEI from any of the local operating units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF) — the entity tasked to support the implementation and use of LEI.

In India, LEI code may be obtained from Legal Entity Identifier India Ltd, a subsidiary of the Clearing Corporation of India, which has been recognised by the RBI as an issuer of LEI under the Payment and Settlement Systems Act, 2007 and is accredited by the GLEIF as the LOU in India for issuance and management of LEI.

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