LEGAL ENTITY IDENTIFIER

[Mr. M. GOVINDARAJAN]

Vide RBI/2016-17/314 FMRD.FMID No.14/11.01.007/2016-17, dated 01.06.2017 the Reserve Bank of India has conveyed its decision to implement the Legal Entity Identifier (‘LEI’ for short) system for all participants  in the Over-the-Counter Markets for Rupee Interest Rate Derivatives, foreign currency derivatives and credit derivatives in India, in a phased manner.  Accordingly Reserve Bank of India required all current and future participants to obtain the unique LEI code as per the schedule given below-

Phase	Entities	Date by which LEI Code is to be obtained
Phase I	Entities regulated by RBI / SEBI / IRDA / PFRDA and Corporate With Net Worth above ₹ 10000 mn	August 1, 2017
Phase II	Corporate With Net Worth between ₹ 2000 mn and ₹ 10000 mn	October 1, 2017
Phase III	Corporate With Net Worth between ₹ 700 mn and ₹ 2000 mn	December 1, 2017
Phase IV	Corporate With Net Worth between ₹ 700 mn and below	March 31, 2018

In the Statement on Developmental and Regulatory Policies dated October 4, 2017 it was indicated that LEI system for all borrowers of banks having total fund based and non-fund based exposure of ₹ 5 crore and above will be introduced in a phased manner.  As such vide RBI/2017-18/82 DBR No. BP.BC.92/21.04.048/2017-18, dated 02.11.2017 the Reserve Bank of India asked all the schedule banks to advise their existing large corporate borrowers having total exposures of ₹ 50 crore and above to obtain LEI as per the schedule given in the following table-

Total exposure to SCBs	To be completed by
₹ 1000 crore and above	Mar 31, 2018
Between ₹ 500 crore and ₹ 1000 crore	Jun 30, 2018
Between ₹ 100 crore and ₹ 500 crore	Mar 31, 2019
Between ₹ 50 crore and ₹ 100 crore	Dec 31, 2019

The Reserve Bank of India further indicated that the borrowers who do not obtain LEI as per the schedule are not to be granted renewal / enhancement of credit facilities.   RBI further advised that Banks should encourage large borrowers to obtain LEI for their parent entity as well as all subsidiaries and associates.

What is LEI?

The structure of the global LEI is determined in detail by ISO Standard 17442 and takes into account Financial Stability Board (FSB) stipulations.   The Legal Entity Identifier (LEI) initiative is designed to create a global reference data system that uniquely identifies every legal entity, in any jurisdiction, that is party to a financial transaction. More specifically, LEI is a unique 20 digit code that is assigned to a legal entity. 

Structure of LEI

The LEI is a 20 character alphanumeric code created using ISO 17442:2012 standard and has the following structure-

• Characters 1 – 4, 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 entity will be assigned unique LEI for use globally.   The LEI itself contain no embedded intelligence.

Purpose of LEI

The global LEI system (GLEIS) has been set up by regulatory authorities [including G20 and the Financial Stability Board (FSB)] 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.

Who needs to apply for LEI?

An entity registered in India needs to apply for LEI code from time to time. The list of entities eligible to apply for LEI codes is-

• Sole proprietorships;
• Limited Liability Partnerships;
• Partnership Firms;
• Private Limited Companies;
• Public Limited Companies;
• Government Companies;
• One Person Company;
• Insurance Companies;
• Housing Finance Companies;
• Non Banking Finance Companies;
• Non Profit companies;
• Special Purpose Vehicles – Trusts;
• Special Purpose Vehicles – Companies;
• Special Purpose Vehicles – Partnership Firms;
• Special Purpose Vehicles = Co-Operative Societies or Multi State Co-Operative Societies;
• Mutual Fund;
• Mutual Funds – Sub Scheme;
• Alternative Investment Fund;
• Alternative Investment Fund sub scheme;
• Nationalized Banks;
• Scheduled Urban Cooperative Bank;
• Banking companies – others;
• Stand Alone Primary Dealers,
• Public Financial Institutions;
• Unlimited Companies;
• Cooperative Societies or Multistate Cooperative Societies;
• Government Organizations;
• Companies Limited by Guarantee etc.,

Obtaining LEI

The Reserve Bank of India indicated that 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 LEI. In India, LEI code may be obtained from Legal Entity Identifier India Ltd (LEIIL), a subsidiary of the Clearing Corporation of India Limited (CCIL), which has been recognized 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.  After obtaining LEI code, banks shall also ensure that borrowers renew the codes as per GLEIF guidelines.

Charges for registering for LEI

With effect from July 1, 2017 , LEI issuance fee of ₹ 7,000/- (plus Goods and Service Tax @18%, as applicable) i.e. Rs .8, 260/- is payable on issuance of LEI code. The annual fee for maintenance and renewal of LEI is ₹ 3,650/- (plus Goods and Service Tax @ 18%, as applicable) i.e., ₹ 4307/-.  The payment can be made by way of NEFT/ Demand Draft payable at Mumbai.

For NEFT payment, the details of account are as under:

• Account Holder Name -Legal Entity Identifier India Limited;
• Account number-05420350001234;
• Bank Name- HDFC Bank Ltd. Bank Branch Name Kamala Mills Compound, Lower Parel;
• IFSC Code HDFC0000542

Demand Drafts may be made in favour of “Legal Entity Identifier India Limited” payable at Mumbai. The reference number of the  application should be mentioned on the reverse of the demand draft. The same may be send to:

Legal Entity Identifier India Limited,

 Finance and Accounts Department,

 CCIL Bhavan, Fifth Floor,

S. K. Bole Road, Dadar (West),

Mumbai – 400 028

Tel. No. 91-22-61546565 / 64

Website - www.ccilindia-lei.co.in.

Reference:

www.ccilindia-lei.co.in.