LEI for Non-individual Borrowers

The central bank stated in a notification Circular no. RBI/2022-23/34 DOR.CRE.REC.28/21.04.048/2022-23, Dated: 21.04.2022 that following a review, it has been determined that the rules on LEI would be extended to Primary (Urban) Co-operative Banks (UCBs) and Non-Banking Financial Companies (NBFCs).

Previously, the RBI decided in Circular no. RBI/2017-18/82 DBR No.BP.BC.92/21.04.048/2017-18, Dated: 02.11.2017, that banks should advise their existing large corporate borrowers with total exposures of Rs. 50 crore and above to obtain LEI codes within the timeframes specified in the schedule annexed to the Circular. Banks should also push major borrowers to get LEI for both their parent organization and their subsidiaries and affiliates.

The RBI has now decided to extend the Legal Entity Identifier (LEI) rules to Primary (Urban) Co-operative Banks (UCBs) and Non-Banking Financial Companies (NBFCs). Furthermore, the RBI has advised that non-individual borrowers with aggregate exposure of Rs. 5 crores or more from banks and financial institutions must get LEI codes within the timeframes mentioned in the Circular. All fund-based and non-fund-based (credit and investment) exposure of banks/FIs to the borrower should be included in the word “exposure.” The higher the aggregate sanctioned limit or the outstanding balance must be used for this purpose.

Furthermore, the RBI has said that borrowers who do not secure LEI codes from an approved Local Operating Unit (LOU) would not be awarded any new exposure or renewal/enhancement of any existing exposure. Departments/Agencies of the Central and State Governments, however, are excluded from the clause if they are not Public Sector Undertakings registered under the Companies Act, 2013 or constituted as Corporations under the appropriate law.