RBI mandates unique code for all large corporate borrowers
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The idea of LEI, a 20-digit unique code to identify parties to financial transactions worldwide, was conceived in the aftermath of the 2008 global financial crisis in a bid to improve financial data systems and strengthen risk management capabilities.
The central bank has directed lenders not to renew or enhance the credit facilities of borrowers who do not obtain an LEI within a given time frame. It has also asked banks to encourage large corporate borrowers to obtain the code for their parents as well as subsidiaries and associates.
The LEI code can be obtained from local operating units accredited by the Global Legal Entity Identifier Foundation, which supports and implements the use of LEI. In India, the code can be obtained from Legal Entity Identifier India Ltd, a subsidiary of RBI-recognized Clearing Corporation of India Ltd.
Borrowers have been divided into four groups and the RBI has set a deadline for companies in each of the sets to obtain an LEI code.
Those with exposure of Rs1,000 crore and more to the banking system must obtain the code by 31 March 2018 and those between Rs500 and Rs1,000 crore by 30 June 2018.
Borrowers with an exposure of Rs100-500 crore need to get the code by 31 March 2019, and those with Rs50-100 crore by 31 December 2019.
RBI said it would issue a roadmap for borrowers of Rs5 crore to Rs50 crore for obtaining LEI code in due course. #casansaar (Source - LiveMint
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