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The Reserve Bank of India (RBI) has prescribed a timeline for non-individual borrowers enjoying aggregate exposure of ₹5 crore and above from banks and financial institutions to obtain Legal Entity Identifier (LEI) codes.
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. LEI is a 20-digit unique code to identify parties to financial transactions worldwide.
Per the timeline, borrowers with a total exposure above ₹25 crore have to obtain LEI by April 30, 2023, and borrowers with total exposure above ₹10 crore and up to ₹25 crore have to obtain LEI by April 30, 2024. Borrowers with total exposure of ₹5 crore and above, and up to ₹10 crore have to obtain LEI by April 30, 2025.
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,” per an RBI circular.
The central bank emphasised that borrowers who fail to obtain LEI codes from an authorised Local Operating Unit (LOU) shall not be sanctioned any new exposure nor shall they be granted renewal/enhancement of any existing exposure.
However, departments/agencies of Central and State governments (not PSUs registered under Companies Act or established as corporation under the relevant statute) shall be exempted from this provision. For the purpose of the circular, “banks” include scheduled commercial banks (excluding regional rural banks), local area banks, small finance banks and primary (urban) co-operative banks.
Further, “financial institutions” include Exim Bank, SIDBI, NHB, NABARD and 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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