RBI to introduce LEI for large-value transactions in RTGS/NEFT from April

The Reserve Bank of India (RBI) has decided to introduce the Legal Entity Identifier (LEI) system for all payment transactions of value ?50 crore and above undertaken by entities (non-individuals) using the Reserve Bank-run Centralised Payment Systems with effect from April 1.

What is LEI number?

• The Legal Entity Identifier (LEI) is a 20-digit number.
• It is used to uniquely identify parties to financial transactions worldwide while improving the quality and accuracy of financial data systems for better risk management post the global financial crisis.
• LEIL has been recognized by the Reserve Bank of India as an “Issuer” of Legal Entity Identifiers under the Payment and Settlement Systems Act 2007.
• The body that supports the implementation and use of LEI is the Global Legal Entity Identifier Foundation (GLEIF). 
• It helps in better risk management, especially in the post-Global Financial Crisis era.

Background

• In India, RBI introduced LEI first through a circular issued in June 2017 for participants in OTC derivatives market.
• In November, RBI extended LEI for large corporate borrowers. In June 2020, the Insurance Regulatory and Development Authority of India issued a circular for insurers to obtain LEI.
• The RBI has now introduced LEI for large value transactions.