The Reserve Bank of India has introduced the legal entity identifier (LEI) system for all payment transactions of value Rs 50 crore and above.

Effective from 1 April, it will be mandatory for all entities (non-individuals) using RBI-run centralised payment systems like real time gross settlement (RTGS) and national electronic funds transfer (NEFT).

The LEI is a 20-digit number used to uniquely identify parties involved in financial transactions world over. “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,” RBI said.

LEI will be rolled out in a phased manner for participants in the over the counter (OTC) derivative and non-derivative markets as also for large corporate borrowers.

In preparation for the wider introduction of LEI across all payment transactions, member banks should:

i. advise entities who undertake large value transactions (Rs 50 crore and above) to obtain LEI in time, if they do not already have one;

ii. include remitter and beneficiary LEI information in RTGS and NEFT payment messages;

iii. 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) (https://www.ccilindia-lei.co.in), which is also recognised as an issuer of LEI by the Reserve Bank under the Payment and Settlement Systems Act, 2007.