RBI introduces Legal Entity Identifier for Large Value Transactions in Centralised Payment Systems [Read Circular]

RBI - Legal Entity Identifier - Large Value Transactions - Centralised Payment Systems - Taxscan

The Reserve Bank of India introduced the Legal Entity Identifier (LEI) for Large Value Transactions in Centralised Payment Systems.

The LEI is a 20-digit number used to uniquely identify parties to financial transactions worldwide. It was conceived as a key measure to improve the quality and accuracy of financial data systems for better risk management post the Global Financial Crisis.

The RBI has now decided to introduce the LEI system for all payment transactions of value Rs.50 crore and above undertaken by entities (non-individuals) using Reserve Bank-run Centralised Payment Systems viz. Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).

The LEI has been introduced by the RBI in a phased manner for participants in the over the counter (OTC) derivative and non-derivative markets as also for large corporate borrowers.

The RBI as the preparation for the wider introduction of LEI across all payment transactions, issued directions to the member banks.

Firstly, the member bank must advise entities who undertake large value transactions (Rs.50 crore and above) to obtain LEI in time, if they do not already have one.

Secondly, include remitter and beneficiary LEI information in RTGS and NEFT payment messages (details of the identified fields in the messaging structures of RTGS and NEFT for inclusion of LEI information).

Lastly, maintain records of all transactions of Rs.50 crore and above through RTGS and / or NEFT.

“Entities can obtain LEI from any of the Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (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 RBI said.

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