Current Affairs

RBI Directs Large Borrowers to Obtain Unique Identifier Code

Reserve Bank of India (RBI) has decided to make it mandatory to obtain Legal Entity Identifier (LEI) code.

  • It is for corporate borrowers having aggregate exposure of Rs. 5 crore and above from any bank.
  • The implementation of LEI will improve the quality and accuracy of financial data for better risk management. 
  • RBI has directed the banks to motivate large borrowers to obtain LEI for their parent entity as well as all subsidiaries and associates.

What is LEI?

  • It is a 20-digit LEI code which is considered as a global standard to identify parties undertaking transactions internationally, post the Global Financial Crisis in 2008.
  • In India, LEI code is issued by Legal Entity Identifier India.
  • Legal Entity Identifier India works as a local operating unit for the global reference number. 
  • The code will be captured in CRILC, which is Central Repository of Information on Large Credits. This decision will help in the assessment and monitoring of aggregate borrowing by entity/ groups.
  • It was developed the G20 in response to the inability of financial institutions to identify organisations uniquely.
  • It tracks the their financial transactions in different national jurisdictions
  • The first LEIs were issued in December 2012.

Code Structure

  • The technical specification for LEI is ISO 17442.
  • An LEI consists of a 20-character alphanumeric string, with the first 4 characters identifying the Local Operating Unit (LOU) that issued the LEI. 
  • Characters 5 and 6 are reserved as '00'. Characters 7-18 are the unique alphanumeric string assigned to the organisation by the LOU. 
  • The final 2 characters are checksum digits.
RBI Directs Large Borrowers to Obtain Unique Identifier Code RBI Directs Large Borrowers to Obtain Unique Identifier Code Reviewed by Admin on November 06, 2017 Rating: 5

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