Legal Entity Identifier (LEI) for Borrowers

Update from RBI on obtaining LEI code for non-individual (corporate) borrowers:

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Notification Date

21/04/2022

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Subject

Legal Entity Identifier (LEI) for Borrowers

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Applicability

Non-individual borrowers such as Companies, LLPs, Firms, etc.

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Brief description

All non-individual borrowers enjoying aggregate exposure of ₹5 crore and above from banks and financial institutions (FIs) shall be required to obtain LEI codes as per the timeline given below.

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Timeline

Total Exposure

LEI to be obtained on or before

Above ₹25 crore

April 30, 2023

Above ₹10 crore, up to ₹25 crore

April 30, 2024

₹5 crore and above, up to ₹10 crore

April 30, 2025

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Definitions

1. Exposure:  “Exposure” for this purpose shall include all fund based and non-fund based (credit as well as investment) exposure of banks/FIs to the borrower. Aggregate sanctioned limit or outstanding balance, whichever is higher, shall be reckoned for the purpose.

2.  “Banks” shall mean Scheduled Commercial Banks (excluding Regional Rural Banks), Local Area Banks, Small Finance Banks and Primary (Urban) Co-operative Banks.

3.  Financial Institutions” (FIs) shall mean All India Financial Institutions (Exim Bank, SIDBI, NHB, NABARD and NaBFID) and NBFCs (including HFCs)

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Consequences for not obtaining LEI within the timelines

Borrowers who fail to obtain LEI codes from an authorized Local Operating Unit (LOU) shall not be sanctioned any new exposure nor shall they be granted renewal/enhancement of any existing exposure.

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Exemptions from obtaining LEI

Departments/Agencies of Central and State Governments (not Public Sector Undertakings registered under Companies Act or established as Corporation under the relevant statute) shall be exempted from this provision.

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Previous Notification

RBI notification dated 2nd November 2017 – It was notified that the LEI system for all borrowers of banks having total fund based and non-fund based exposure of ₹ 5 crore and above will be introduced in a phased manner.

Accordingly, it was made mandatory to the existing large corporate borrowers having total exposures of ₹ 50 crore and above to obtain LEI as per below schedule:

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

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Applicability of guidelines for the loan availed from UCBs and NBFCs

Credit facilities availed from Primary (Urban) Co-operative Banks (UCBs) and Non-Banking Financial Companies (NBFCs) were not included in this provision previously. However, now it has been decided that the said guidelines shall also be extended to the credit facilities availed from UCBs and NBFCs.

Please find attached copy of RBI notitication for your reading and reference.

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