As of October next year, companies will have to provide the Legal Entity Identifier (LEI) number in order to conduct 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 around the world in order to improve the quality and accuracy of financial data systems.
The identifier has been gradually introduced by the central bank for participants in over-the-counter (OTC) derivatives markets, non-derivative markets, large corporate borrowers and large-scale transactions in centralized payment systems.
“In order to continue to use the advantages of the LEI, it was decided that banks of AD category I would receive the LEI number from the resident companies (not natural persons) with effect from October 1, 2022, the capital or current account transactions of Rs 50 crore and more (per transaction) under FEMA, 1999, ”RBI said in a circular. Regarding non-resident counterparties / overseas companies, in the event that LEI information is unavailable, banks can process the transactions to avoid disruption, it said.
The Reserve Bank also said banks could encourage affected companies to voluntarily provide LEIs while they are still in transactions before October 1, 2022.
“Once a company has an LEI number, it must be reported on all transactions made by that company, regardless of the size of the transaction,” he added. WITH PTI
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