The Reserve Bank of India set a three-year timetable for non-individual borrowers with aggregate exposures of Rs 5 crore or more to obtain Legal Entity Identifier (LEI) codes.
The LEI is a 20-character alpha-numeric code used to uniquely identify parties to financial transactions worldwide. It is being implemented to improve the quality and accuracy of financial data reporting systems for better risk management.
It is used to create a global reference data system that uniquely identifies every legal entity in any jurisdiction that is party to a financial transaction.
Those with exposure above Rs 25 crore from banks and financial institutions will have to get LEI code on or before April 30, 2023.
For those with exposure between Rs 10 to 25 crore will get more year (till April 30, 2024) and those with Rs five and upto Rs 10 crore have to get LEI code on or before April 30, 2025.
RBI said borrowers who fail to obtain LEI codes from an authorized Local Operating Unit (LOU) will not get sanctions for any new exposure. They will not be granted renewal/enhancement of any existing exposure.
However, departments and agencies of Central and State Governments shall be exempted from this provision. The RBI has decided to extend guidelines for LEI to Urban Cooperative Banks and non-banking finance companies.