RBI introduces Legal Entity Identifier for large-value transactions

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

LEI is a 20-digit number used to uniquely identify parties to financial transactions worldwide. It was conceived as a key measure to improve the quality and accuracy of financial data systems for better risk management post the global financial crisis.

In preparation for the wider introduction of LEI across all payment transactions, the RBI asked member banks participating in Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) to advise entities who undertake large value transactions (Rs. 50 crore and above) to obtain LEI in time, if they do not already have one.

Member banks should include remitter and beneficiary LEI information in RTGS and NEFT payment messages. Further, they have to maintain records of all transactions of Rs. 50 crore and above through RTGS and / or NEFT.

Entities can obtain LEI from any of the Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF), the body tasked to support the implementation and use of LEI.

In India, LEI can be obtained from Legal Entity Identifier India Ltd. (LEIL), which is also recognised as an issuer of LEI by the Reserve Bank under the Payment and Settlement Systems Act, 2007.