LEI CODE: Legal Entity Identifier Code for Entities participants in Financial Transaction By CA Dhaval Doshi


The LEI system has been implemented in a phased manner for participants (other than individuals) in the over-the-counter markets for rupee interest rate derivatives, foreign currency derivatives and credit derivatives in India in terms of RBI circular FMRD.FMID No. 14/11.01.007/2016-17 dated June 1, 2017, and for large corporate borrowers of banks in terms of  RBI Circular DBR.No.BP.BC.92/21.04.048/2017-18 dated November 2, 2017.

A. LEI Code:

The Legal Entity Identifier (LEI) code has been conceived of as a key measure to improve the quality and accuracy of financial data systems for better risk management post the Global Financial Crisis.

The LEI is a 20-character unique identity code assigned to entities who are parties to a financial transaction. Globally, It helps in labeling an entity with an Identity number which has entered into financing transactions and is registered with multiple agencies having varied registration numbers.

use of LEI has expanded beyond derivative reporting and it is being used in areas relating to banking, securities market, credit rating, market supervision, etc.

LEI is a unique 20 character alphanumeric code assigned to a legal entity once registered, using standard ISO 17442: 2012 standard and is of the following structure:

First Four Characters (1-4)

Fifth & Sixth Character (5-6)

Seventh to Eighteenth Characters (5-18)

Nineteenth to Twentieth Character (19-20)

First 4 Characters are Identification Numbers of LOU (For LEIL it is 3358)

These are reserved Digits -Set to Zeros (00)

There 12 Characters are Alphanumeric Random Number set according to transparent and sound allocation Policies

These are calculated and checked Digits under ISO 17442


B. APPLICABILITY:

  1. All Eligible Participants in the OTC Derivative markets
  2. Large Corporate Borrowers
  3. All Eligible Participants in Non- Derivative Market
1. All Eligible Participants in the OTC Market:

Reserve Bank of India vide notification dated June 1, 2017, has decided to implement the LEI system for all participants in the Over-the-Counter (OTC) markets for Rupee Interest Rate derivatives, foreign currency derivatives and credit derivatives in India, in a phased manner. Accordingly, all current and future participants would be required to obtain the unique LEI code as per timelines are given below in the table.

Phase

Entities

Date by which LEI Code Obtained

Phase - 1

Entities regulated by RBI / SEBI / IRDA / PFRDA and Corporate With Net Worth above Rs 10000 million

1st August 2017

Phase - 2

Corporate With Net Worth between Rs 2000 million and Rs 10000 million

1st October 2017

Phase -3

Corporate With Net Worth between Rs 700 million and Rs 2000 million

1st December 2017

Phase -4

Corporate With Net Worth between Rs 700 million and below

31st  March 2018


2. Large Corporate Borrowers:
 

Reserve Bank of India vide notification dated November 2, 2017  Banks shall advise their existing large corporate borrowers having total exposures of 50 crores and above to obtain LEI.

For all borrowers of banks having Total Fund Based and Non-Fund Based exposure of Rs. 5 crore and above, would be issued in due course. obtain LEI as per timelines are given below in the table.

Total Exposure of Schedule Commercial Bank

To be Completed By

1000 Crore and above

March 31 , 2018

Between 500 Crore and 1000 Crore

June 30, 2018

Between 100 Crore and 500 Crore

March 31, 2019

Between 50 Crore and 100 Crore

Dec 31, 2019

Between 5 Crore and 50 Crore

Yet to be notified


3.All Eligible Participants in Non- Derivative Market:

Reserve Bank of India vide notification dated November 29, 2018 has decided that All participants, other than individuals, undertaking transactions in the markets regulated by RBI viz., Government securities markets, money markets (markets for any instrument with a maturity of one year or less) and non-derivative forex markets (transactions that settle on or before the spot date) shall obtain Legal Entity Identifier (LEI) codes by the due date indicated in the table given below. 

For Non-Derivative:

In case of non-derivative forex transactions, while all inter-bank transactions shall be subject to LEI requirement, client transactions shall require LEI code for transactions involving an amount equivalent to or exceeding USD one million or the equivalent thereof in other currencies.

For NRI:

Non-resident entities undertaking financial transactions in the relevant markets shall also require LEI code. Such entities that are not legal entities in their country of incorporation (e.g., funds operated by a non-resident parent/management company that are each registered as an FPI) shall use the LEI code of the parent/management company.

Entities undertaking financial transactions shall ensure that their LEI code is considered current under the rules of the Global LEI System. Lapsed LEI codes shall be deemed invalid for transactions in markets regulated by RBI.

Schedule for Implementation of LEI in the Money market, G-sec market, and Forex market

Phase

Net worth of Entities

Proposed Deadline

Phase -i

Above Rs.10000 million

April 30, 2019

Phase -ii

Between Rs.2000 million and Rs 10000 million

August 31, 2019

Phase- iii

Up to Rs.2000 million

March 31, 2020


C. REGISTRATION PROCESS FOR LEI CODE:
 

a) Make Registration at LEI with https://www.ccilindia-lei.co.in
b) Create Account
c) File online registration form with necessary details with following details

        Legal Name of Entity
        Industry Classification
        Type of Entity
        PAN Number
        Details of Parent Company
        Other Details if required

d) Email verification received for authorised person; email verify the same before proceeding further

e) Mode of payment and submit an application

f) After Submitting form reference number generated and received in an email with draft documents in registered email id from LEI department.

g) Prepare all necessary documents physically and attached all the documents as given in the checklist received from LEI Department.

 

h) All the physical documents sent to the following address:

       Legal Entity Identifier India Limited
       CCIL Bhawan
       3rd Floor,
       S.K.Bole Road, dada ( West ) Mumbai - 400028
       Maharashtra

i) The LEI department will verify all the documents and after all verification make the payment link or payment mode as selected.

j) Within Some days LEI Code will be generated and it will be valid for 1 year from the date of issuance. after one year LEI code will be renewal as per the details are given in the site.

D. DOCUMENTS REQUIRED FOR LEI CODE: 

Following  documents required as per the registration entity as specified by the LEIL and  the format also given in website  https://www.ccilindia-lei.co.in in the download section :

a) Certificate of Incorporation / Registration of Certificate
b) PAN Card
c) Undertaking - Cum Indemnity as format given by LEIL
d) Audited Financial Statement
e) Board Resolution as format Specified by LEIL
f) Power of Attorney as per format Specified by LEIL
g) Auditor's Certificate as per format

E. PAYMENT CHARGES FOR LEI CODE: 

LEIL announces the reduction of fees for New Registration with effect from 1st Jan 2019.

For New Registration:

Rs.4500 + 810 (18% GST) = Rs.5,310 (Revised from Rs 5000+GST=Rs.5900)  With effect from Jan 1, 2019

For Renewal: (Renewal fees are not applicable at the time of new registration.)?

Rs.3000+ 540 (18% GST) = Rs.3,540 (Revised from Rs 3500+GST=Rs.4130) With effect from

Jan 1, 2019

**Applicants who have received official intimation from LEIL for payment or have made payment to LEIL prior to 1st Jan 2019 will continue to pay fees based on the fees applicable during that period.

F: LEI BENEFIT TO INDUSTRY

As a global business and third-party relationships become more complex, the need for clear and speedy business identification grows. Common standards, like LEI, enable better identification and better data sharing, helping to lower costs and speed up business processes. Of course, appropriate due diligence is still necessary; one number won’t magically solve all Know Your Business (KYB) requirements. But, as an added data point and extra check to ensure you can trust your business relationships, LEI is another useful tool for international business growth.

Click here to read the disclaimer


Write a Comment