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RBI asks large borrowers to obtain 20-digit Legal Entity Identifier unique code

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On November 3, 2017, Reserve Bank of India (RBI) issued a notification, directing corporate borrowers having exposure of Rs 5 crore and above to mandatorily obtain 20-digit Legal Entity Identifier (LEI). 

More information related to Legal Entity Identifier (LEI):

LEI is a 20-digit global reference number that uniquely identifies every legal entity/organisation that is party to a financial transaction, in any country.

  • Global Legal Entity Identifier Foundation (GLEIF) is the entity tasked to support the implementation and use of LEI.
  • LEI can be obtained from any of the local operating units (LOUs) accredited by GLEIF. In India, Legal Entity Identifier India Limited, a wholly-owned subsidiary of the Clearing Corporation of India, acts as a local operating unit (LOU) for issuing LEIs.RBI

Schedule for implementing the LEI:

Fund and non-fund exposure Deadline for obtaining LEI
Rs 1,000 crore and above March 31, 2018
Rs 500 crore – Rs 1,000 crore June 30, 2018
Rs 100 crore – Rs 500 crore March 31, 2019
Rs 50 crore – Rs 100 crore December 2019
Rs. 5 crore – Rs. 50 crore RBI will soon issue a separate roadmap

Tracking Borrower’s Profile through LEI:

Tracking borrowers through LEI is one of the risk management measures adopted by RBI in wake of huge accumulated non-performing assets in Indian Banking system.

  • Adhering to the above stated schedule, Banks will be required to acquire LEI number from the borrowers and report it to the Central Repository of Information on Large Credits (CRILC)  CRILC is a database in which details of loans above Rs 5 crore are maintained.
  • On basis of LEI, banks will be able to monitor the aggregate loan taken (from other banks/financial institutions) of corporate borrowers.
  • Besides, fetching loan details on basis of LEI, will prevent banks from extending multiple loans to companies against the same collateral.
  • Credit Facilities to entities that fail to obtain LEI within prescribed time limit will not be renewed or enhanced.