RBI to Introduce LEI System for Transactions above 50 Crore
The Reserve Bank of India (RBI) has introduced the LEI- Legal Entity Identifier for large value transactions over Rs 50 lakhs in Centralized Payment Systems. This will be effective from 1st April 2021.
- Legal Entity Identifier is a 20-digit number that is used to uniquely identify parties to financial transactions globally while enhancing the accuracy and quality of financial data systems for improved risk management post the global financial crisis.
- RBI has now decided to introduce the LEI system for all transactions of Rs 50 crore and above made by non-individuals (entities) using Centralized Payment Systems- National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS).
- The LEI system has been introduced in a phased manner for participants in non-derivative markets and over the counter (OTC) derivative.
- As per the new guidelines of RBI, member banks should advise entities who undertake transactions of Rs 50 crore and above to obtain LEI in time.
- Along with this, member banks will have to include the beneficiary and remitter LEI information in NEFT and RTGS payment messages.
- Member banks are also required to maintain records of all transactions of Rs 50 crore and above through NEFT and/or RTGS.
- Entities that wish to obtain an LEI can contact any Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF).
- RBI has given its permission to Legal Entity Identifier India Ltd. (LEIL) in India for issuing the LEI under the Payment and Settlement Systems Act, 2007.
NEFT and RTGS
National Electronic Funds Transfer (NEFT) is an electronic fund transfer system that is maintained by RBI. In NEFT, transfers do not occur in real-time. RTGS is a fund transfer system where the transfer takes place in real-time and on a gross basis.