RBI has issued a circular for introducing Legal Entity Identifier for Large Value Transactions in Centralized Payment Systems

RBI has issued a circular for introducing Legal Entity Identifier for Large Value Transactions in Centralized Payment Systems

The Reserve Bank of India (RBI) has issued a circular on 5 January 2021, to introduce the Legal Entity Identifier (LEI) for Large Value Transactions in Centralized Payment Systems (CPS)

Legal Entity Identifier India Limited (LEIL) is a Wholly Owned Subsidiary of the clearing corporation of India Ltd. that acts as a Local Operating Unit (LOU) for issuing globally compatible Legal Entity Identifiers (LEIs) in India.

It has been recognized by the RBI as an "Issuer" of LEI under the Payment and Settlement Systems Act, 2007 (as amended in 2015). LEIL has been accredited by the Global Legal Entity Identifier Foundation (GLEIF) as a Local Operation Unit (LOU) for issuance and management of LEI's.

The LEI is a global reference number that uniquely identifies every legal entity or structure that is a party to a financial transaction, in any jurisdiction.

LEIL will assign LEIs to any legal identity including but not limited to all intermediary institutions, banks, mutual funds, partnership companies, trusts, holdings, special purpose vehicles, asset management companies, and all other institutions being parties to financial transactions. LEI will be assigned on application from the legal entity and after due validation of data.

The RBI has issued a circular to introduce the LEI system for all payment transactions of value Rs.50 Crores and above undertaken by entities and not by individuals who are using Reserve Bank-run Centralized Payment Systems viz. Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).

The RBI has introduced the LEI in a phased manner for participants in the Over The Counter (OTC) derivative and non-derivative markets as also for large corporate borrowers. It is working to introduce the LEI across all payment transactions, issued directions to the member banks.

Under the said procedure, the member bank has to advise the entities who are undertaking large value transactions for obtaining LEI in time. They also have to include remitter and beneficiary LEI information in RTGS and NEFT payment messages that shall contain the details of the identified fields in the messaging structures of RTGS and NEFT for the inclusion of LEI information. They have to maintain records related to all large value transactions of Rs.50 Crores and above through RTGS and/or NEFT.

The RBI stated, "Entities can obtain LEI from any of the LOUs accredited by the GLEIF, the body tasked to support the implementation and use of LEI. In India, LEI can be obtained from LEIL (https://www.ccilindia-lei.co.in), which is also recognized as an issuer of LEI by the RBI under the Payment and Settlement Systems Act, 2007".