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20-digit LEI must for cross-border transactions soon: RBI


 

20-digit LEI must for cross-border transactions soon: RBI


The legal entity identifier is a 20-digit number used to uniquely identify parties to financial transactions globally to improve the quality and accuracy of financial data systems.


Starting October next year, companies will have to quote the legal entity identifier (LEI) number so as to undertaking cross-border transactions of Rs 50 crore or more, the Reserve Bank of India (RBI) said on Friday.

The LEI is a 20-digit number used to uniquely identify parties to financial transactions globally to improve the quality and accuracy of financial data systems.

The identifier has been introduced by the central bank in a phased manner for participants in the over-the-counter (OTC) derivative, non-derivative markets, large corporate borrowers and large value transactions in centralised payment systems.

“In order to further harness the benefits of LEI, it has been decided that AD Category I banks, with effect from October 1, 2022, shall obtain the LEI number from the resident entities (non-individuals) undertaking capital or current account transactions of Rs 50 crore and above (per transaction) under FEMA, 1999,” the RBI said in a circular. As regards non-resident counterparts/ overseas entities, in case of non-availability of LEI information, banks may process the transactions to avoid disruptions, it said.

The Reserve Bank also said banks may encourage concerned entities to voluntarily furnish LEI while undertaking transactions even before October 1, 2022.

“Once an entity has obtained an LEI number, it must be reported in all transactions of that entity, irrespective of transaction size,” it added.  WITH PTI

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Aseem Aggarwal
CA, CPA, CS, B.Com(H)
+91 7508000350
aseem@ksafirm.com

Source: https://indianexpress.com/article/business/lei-must-for-cross-border-transactions-rbi-7666894/

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