FEMA Regulation: Legal Entity Identifier for Cross-border Transactions

1. The Legal  Entity  Identifier  (LEI)  is  a 20-digit  number  used to uniquely  identify  parties  to financial  transactions  worldwide  to improve the quality  and accuracy  of  financial  data systems.  LEI  has  been introduced by  the Reserve 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. 

2.  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  ₹50  crore and above  (per  transaction)  under  FEMA,  1999.  As  regards  non-resident  counterparts/ overseas  entities,  in case of  non-availability  of  LEI  information,  AD  Category  I  banks  may process  the transactions  to avoid disruptions.  Further,  AD  Category  I  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. 

3.  AD  Category-I  banks  shall  have the required systems  in place to capture the LEI information and ensure that  any  LEI  captured is  validated against  the global  LEI  database available on the website of  the Global  Legal  Entity  Identifier  Foundation (GLEIF).

4.  AD  banks  may  bring the contents  of  this  circular  to the notice of  their  constituents concerned  and  advise  entities  who  undertake  large  value  transactions  (₹50  crore  and above)  under  FEMA,  1999 to obtain LEI  in time,  if  they  do not  already  have one issued.

5.  Entities  can  obtain  LEI  from  any  of  the  Local  Operating  Units  (LOUs)  accredited by  the 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.  The rules,  procedures  and documentation requirements may  be ascertained from  LEIL. 

6.  The directions  contained  in this  circular  are being issued under  sections  10(4)  and 11(1)  of  the Foreign Exchange Management  Act  (FEMA),  1999 (42 of  1999)  and are without  prejudice to permissions/approvals,  if  any,  required under  any  other  law.   

RBI/2021-22/137   A.P.  (DIR  Series)  Circular  No.  20  / December  10,  2021 

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