What is LEI number – Structure and Purpose : LEI (Legal Entity Identifier) – a 20 character unique code or identifier defined by ISO 17442 to identify legal entities engaged in financial transactions Globally. Legal Entity Identifier (LEI) system was developed by G20. It enables the regulators to track or uniquely identify the financial transactions of financial institutions in different national jurisdictions.
Legal Entity Identifier Number (LEI) – Structure and Purpose
Structure of an LEI number
LEI is a 20 character alphanumeric code defined by ISO 17442:2012 standard and has the following structure.
Characters 1-4, LOU identifier – a four-character prefix assigned by the ROC Secretariat, unique to each LOU (for LEIL–3358).
Characters 5-6, 2 reserved characters – 00
Characters 7-18, 12 characters generated and assigned to an entity by the LOU according to transparent and sound allocation policies
Characters 19-20, 2 check digits under ISO 17442.
Every eligible legal entity will be assigned unique LEI for use globally. The LEI itself will contain no embedded intelligence
What is the purpose of an LEI number ?
The first LEI (Legal Entity Identifier ) was issued in December 2012. The global LEI system (GLIES) has been set up by regulatory authorities (including G20 and 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 help improve the measuring and monitoring of systemic risk and support more cost-effective compliance with regulatory reporting requirements. LEI serve as a proof of identity for a financial entity.
How to obtain LEI number ?
Entities can obtain LEI from any of the Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF) – the entity tasked to support the implementation and use of the LEI. In India, LEI code may be obtained from Legal Entity Identifier India Ltd.(LEIL), which has been recognised by the Reserve Bank as issuer of LEI under the Payment and Settlement Systems Act, 2007 and is accredited by the GLEIF as the Local Operating Unit (LOU) in India for issuance and management of LEI.
GLEIF (Global Legal Entity Identifier Foundation), established by the Financial Stability Board in June 2014, is tasked to support the implementation and use of the Legal Entity Identifier (LEI). The foundation is backed and overseen by the LEI Regulatory Oversight Committee, representing public authorities from around the globe that have come together to jointly drive forward transparency within the global financial markets. GLEIF is headquartered in Basel, Switzerland.
RBI vide its circular RBI/2016-17/314 FMRD.FMID No.14/11.01.007/2016-17 has instructed to implement the LEI system for all participants in the Over-the-Counter (OTC) markets for Rupee Interest Rate derivatives, foreign currency derivatives and credit derivatives in India, in a phased manner.
RBI circular on Introduction of LEI for large corporate borrowers
RBI vide its recent circular RBI/2017-18/82 DBR.No.BP.BC.92/21.04.048/2017-18 dated Nov 2, 2017 has instructed all SCBs (excluding RRBs), all India Financial Institutions (Exim Bank, SIDBI, NHB, NABARD), Local Area Banks, Small Finance Banks to implement the LEI system for all borrowers of banks having total fund based and non-fund based exposure of ₹5 crore and above in a phased manner.
Accordingly, it has been decided that the banks shall advise their existing large corporate borrowers having total exposures of ₹ 50 crore and above to obtain LEI as per the schedule given below. Borrowers who do not obtain LEI as per the schedule are not to be granted renewal / enhancement of credit facilities. A separate roadmap for borrowers having exposure between ₹ 5 crore and upto ₹ 50 crore would be issued in due course.
Banks should encourage large borrowers to obtain LEI for their parent entity as well as all subsidiaries and associates.
After obtaining LEI code, banks shall also ensure that borrowers renew the codes as per GLEIF guidelines.
Schedule for implementation of LEI
|Total exposure to SCBs||To be completed by|
|₹ 1000 crore and above||March 31, 2018|
|Between ₹ 500 cr and ₹ 1000 cr||June 30, 2018|
|Between ₹ 100 cr and ₹ 500 cr||March 31 , 2019|
|Between ₹ 50 cr and ₹ 100 cr||Dec 31, 2019|