All about Legal Entity Identifier (LEI)

All about Legal Entity Identifier (LEI)

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All about Legal Entity Identifier (LEI)

Legal entity identifier (LEI) is now another requirement from the borrower by the bank. It is mandatory for transactions in interest rate, forex and credit derivative market. The Reserve Bank of India (RBI) has also made LEI compulsory for companies and organisations having aggregate fund-based and non-fund based exposure of credit over RS 50 crore.
The Legal Entity Identifier (LEI) is a 20-character, alpha-numeric code based on the ISO 17442 standard developed by the International Organization for Standardization (ISO). It connects to key reference information that enables clear and unique identification of legal entities participating in financial transactions. Each LEI contains well-structured reference data which is categorized into 2 sections – Level 1 – who is who and Level 2 – who owns whom. Level 1 data includes entity registration details, such as legal name, number of registration, legal and HQ address etc. Level 2 contains information about an entity’s ownership structure and thus answers the question who owns whom. Simply put, the publicly available LEI data pool transfers unstructured entity registration data into standardized global directory, which greatly enhances transparency in the global marketplace.
Schedule for implementation of LEI for large corporate borrowers (according to Reserve Bank of India) is as under:
Total Exposure to SCBs
To be completed by
₹ 1000 crore and above
Mar 31, 2018
Between ₹ 500 crore and ₹ 1000 crore
Jun 30, 2018
Between ₹ 100 crore and ₹ 500 crore
Mar 31, 2019
Between ₹ 50 crore and ₹ 100 crore
Dec 31, 2019
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
Extended from March 31 2020 to September 30 2020
Legal entity identifier will help banks and credit providers in monitoring the exposure of corporate borrowers. It will prevent banks from issuing multiple loans against the same collateral. Companies can order LEI from any Local Operating Unit or use the help of service providers such as Registration Agents. LEI REGISTER™  is an LEI Registration Agent. Our main task is to help companies in India to apply for an LEI  in a prompt and easy way.
The application for a legal entity identifier is a simple three-step process.
Fill in all the blanks in the Legal Entity Identifier registration form above.
2. Submit your LEI registration application and pay with Netbanking, Bank transfer, Credit card or Razorpay.
3. Your data will be processed and the legal entity identifier sent to you by e-mail.
This is established by the Financial Stability Board in June 2014, the Global Legal Entity Identifier Foundation (GLEIF) is tasked to support the implementation and use of the Legal Entity Identifier (LEI). The foundation is backed and overseen by the LEI Regulatory Oversight Committee, representing public authorities from around the globe that have come together to jointly drive forward transparency within the global financial markets. GLEIF is a supra-national not-for-profit organization headquartered in Basel, Switzerland.
GLEIF services ensure the operational integrity of the Global LEI System. GLEIF continuously increases both the information available within, and the quality of, the LEI data pool and makes public access to the information ever easier.
The LEI system was initiated as a response to the financial crisis and is aimed at improving transparency in financial data systems. Presently, there are several methods of identifying entities across various markets and countries. However, the Global LEI System (GLEIS), when fully operational will ensure that there is just one standard system. There is a numerous regulation among jurisdictions that require the use of LEI’s. However, the main idea of Global Legal Entity Identifier is to simplify, standardise and provide the ease of identification of any legal entity worldwide.
LEI’s are in use worldwide among different jurisdictions. The USA and European Union were the first to adapt LEI in financial reporting. Although LEI adoption also remains uneven across jurisdictions, with coverage concentrated in Canada, the EU and the United States many countries are starting to follow the adaption. Reserve Bank of India (RBI) has mandated the use of LEI in over the counter derivative market as well as mandating the use of LEI for large corporate borrowers and FX deals. Australia has followed after with ASIC mandating the LEI for derivative transactions.
The LEI code can be obtained by following steps:-
  1. Log on the online portal https://www.ccilindia-lei.co.in/ and access the “Downloads” tab.
  2. The checklist for the documents and their specific formats necessary for submission are available here based on the legal structure of the entity.
  3. Self-registration on the online portal: A person must be appointed as the authorised person to look over and carry out the process of obtaining the LEI Code. A person may be appointed as an authorised person by way of a resolution, power of attorney or voluntarily, as the case may be. It is only this authorised user that has the permission to create an account, providing his official email id and proceeding to fill up the online form. Authorised persons include Primary/Main user who submits the online application form. – Authorised User
  4. The LEI registration form consists of 5 pages in total, including the payment gateway.
  5. Company Information Page: All the basic details of the company are entered on this particular page.
  6. Holding Company Page (Direct Parent Information Page): Details of the parent company are to be filled in here.
  7. Ultimate Parent Page: Where the company is a step-down subsidiary, along with the parent’s details, the ultimate parent’s details are also to be provided.
  8. Payment Page: The payment for the form is to be made once it is complete.
  9. Upload Page: The necessary documents are uploaded on this page.Once the form is filled, the payment page offers the option to either make the payment online immediately or to choose the option of a demand draft. If any of the online payment options are chosen, following which the “Save and Submit” option is selected, once the payment is received by the Legal Entity Identifier India Limited (LEIL), a reference number is generated, which becomes key in any future communication between the parties. In addition to the reference number, an email is also sent, detailing the list of documents to be submitted to the LEIL. If the demand draft option is selected, following which the “Save and Submit” option is selected, the reference number and email are generated immediately.
  10. Submission of the documents: The applicant entity will have to upload all the necessary documents mentioned in the email. The total size of the uploaded documents should be 40MB. If the upload is unsuccessful, then the documents may be couriered to the following address:-
    Legal Entity Identifier India Limited (LEIL) (The Clearing Corporation of India Ltd.) CCIL Bhavan, 3rd Floor, S. K. Bole Road, Dadar West Mumbai – 400028
  11. Verification process: Once the documents are uploaded or sent physically, they will be verified by the LEIL along with the application form. If necessary, the LEIL may ask for additional documents as well. The applicant entity may also be directed to make changes in the application form online by the LEIL.
  12. Issue of LEI Code: The LEI code will be issued on the successful submission and verification of the form and the related documents. The LEI code will be sent in an email to the entity, and this code must be provided to the banks.

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