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The paper comes with the usual disclaimer that while the authors are from RBI, the views expressed in this paper are not necessarily those of the institution
The paper comes with the usual disclaimer that while the authors are from RBI, the views expressed in this paper are not necessarily those of the institution

RBI introduces identification number to track large value transactions

Legal entity identifiers will be included on all payment transactions of value 50 crore made via RTGS and NEFT, RBI said in a notification

Mumbai: The Reserve Bank of India on Tuesday said legal entity identifiers will be mandatory for all fund transfers worth 50 crore and above. The LEI is a 20-digit number used to uniquely identify parties involved in financial transactions world over.

LEI numbers of the beneficiaries and remitters must be included on all payment transactions of value 50 crore made via the Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT), RBI said in a notification.

The idea of LEI, a 20-digit unique code to identify parties to financial transactions worldwide, was conceived in the aftermath of the 2008 global financial crisis in a bid to improve financial data systems and strengthen risk management capabilities.

LEI was introduced by the Reserve Bank in a phased manner for participants in the over the counter (OTC) derivative and non-derivative markets as also for large corporate borrowers.

According to the guidelines, all non-individual entities conducting fund transfers worth 50 crore and above should secure LEI numbers from Legal Entity Identifier India Ltd. Additionally, banks facilitating these large value transactions for their customers must also maintain records.

Introduction of the LEI for all transactions above 50 crore will help banks and regulators track large value transactions more closely. The LEI code can be obtained from local operating units accredited by the Global Legal Entity Identifier Foundation, which supports and implements the use of LEI. In India, the code can be obtained from Legal Entity Identifier India Ltd, a subsidiary of RBI-recognized Clearing Corporation of India Ltd.

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