Are you a business owner in India who borrows from banks and financial institutions? If so, you might need a Legal Entity Identifier (LEI) code. The Reserve Bank of India (RBI) has mandated LEI for non-individual borrowers with a specific borrowing threshold. This blog will explain everything you need to know about the LEI requirement for borrowers in India, including deadlines and how to obtain an LEI code.
What is an LEI Code?
An LEI is a unique 20-digit code assigned to a legal entity. It acts like a global identifier, making it easier to identify businesses involved in financial transactions.
Who Needs an LEI Code in India?
The Reserve Bank of India (RBI) mandates LEI for non-individual borrowers with a combined exposure of ₹5 crore and above from banks and financial institutions. Therefore, The LEI requirement for small borrowers applies to non-individual borrowers, which includes:
- Companies
- Partnerships
- Limited Liability Partnerships (LLPs)
- Trusts (except charitable trusts)
Borrowing Threshold and Timelines for Obtaining LEI by Borrowers
The requirement is based on the total borrowings (fund-based and non-fund based) from all banks and financial institutions combined, not just a single lender. Here’s a breakdown of the Timelines for Obtaining LEI by Borrowers.
Timeline for obtaining LEI by borrower
| Total Borrowing 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 |
Why is LEI Mandatory?
The RBI has implemented LEI to improve transparency and streamline credit assessment for borrowers.
It allows banks to easily identify borrowers and their financial relationships across different institutions. This can lead to more efficient loan processing and better risk management
How to Obtain an LEI Code
Obtaining an LEI code is a straightforward process. Here’s a step-by-step guide:
- Choose an LEI issuing organization (LOU): Several accredited LOUs operate in India. You can find a list on the Global Legal Entity Identifier Foundation (GLEIF) website (https://www.gleif.org/). These organizations are responsible for registering and issuing LEI codes. They also maintain a global LEI database.
- Submit your application: The application process typically involves submitting the following information to your chosen LOU:
- Basic business information: This includes your legal name, registered address, and business registration number.
- KYC documents: These documents help verify your identity and ownership structure. They may include copies of your Certificate of Incorporation, PAN card, and board resolutions.
- Fee payment: LEI issuing organizations charge a fee for processing your application and maintaining your LEI record. The fee may vary depending on the LOU you choose.
- Verification and Issuance: The LOU will verify the information you submitted against official records. Once everything is in order, they will issue your unique LEI code within a few business days. You will receive your LEI code electronically, typically via email.
If your borrowing falls under the mandatory LEI requirement, ensure you obtain your LEI code before the applicable deadline. This will prevent any delays in securing loans or financial services.
FAQs: LEI Requirement for Borrowers in India
No, LEI is mandatory for non-individual borrowers with a combined exposure of ₹5 crore and above from banks and financial institutions.
Your total exposure refers to the combined amount of fund-based and non-fund-based borrowings from all banks and financial institutions you have dealings with. You can check with your banks or access the Central Repository of Information on Large Credits (CRILC) database (if you’re registered).
You can apply for an LEI code through an accredited Local Operating Unit (LOU) in India. The Global Legal Entity Identifier Foundation (GLEIF) website provides a list of LOUs (https://www.gleif.org/).
The application process typically requires:
Basic business information (legal name, address, registration number)
KYC documents (Certificate of Incorporation, PAN card, board resolutions)
If you fall under the mandatory requirement but don’t obtain an LEI code, you might face delays in securing loans or financial services from banks and financial institutions.
Reserve Bank of India website (https://www.rbi.org.in/)
Global Legal Entity Identifier Foundation website (https://www.gleif.org/)
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