After making Legal Entity Identifier (LEI) mandatory for transactions in interest rate, forex and credit derivative market, the Reserve Bank of India (RBI) is set to make LEI compulsory for companies having aggregate fund-based and non-fund based exposure over Rs 5 crore.
Banks will be required to capture this number in the Central Repository of Information on Large Credits (CRILC) database that captures details of loan above Rs 5 crore. The LEI number will help banks in monitoring the aggregate exposure of corporate borrowers. Firms can obtain their LEI code from Legal Entity Identifier India Ltd. (LEIL).
What is an LEI?
The LEI is a global reference number that uniquely identifies every legal entity or structure that is party to a financial transaction, in any jurisdiction. It is a unique 20 digit alphanumeric code that is assigned to a legal entity.
What is the purpose of an LEI?
The global LEI system has been set up by regulatory authorities, including G20 and the Financial Stability Board, to address the global financial crisis. The LEI is designed to enable the identification and linking of parties to financial transactions in order to manage counterparty risk. Its goal is to improve measuring and monitoring of systemic risk and support more cost-effective compliance with regulatory reporting requirements.
Source- The Indian Express