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LEI mandatory for doing bank transactions effective 30-Sep-2020

RBI, made it mandatory to obtain the LEI (Legal Entity Identifier) for all the categories of entities (except individuals) prior to 30th September 2020 who are undertaking the following transactions- 

Transaction amount more than 1 Million USD or equivalent (approx. INR 7 Crore)

Applicable on all entities without transaction limit-

Entities undertaking non-derivative foreign transactions, such as-

 

  • Share Capital Remittance;
  • Exports;
  • Imports;
  • Any foreign income;
  • Any foreign expenditure; etc

Entities undertaking transactions in the markets regulated by RBI, such as-

 

  • Government securities markets;
  • Money markets (markets for any instrument with a maturity of one year or less)

 

 

*Transactions undertaken on recognized stock exchanges are outside the purview of the LEI requirement.

In addition to the above category of entities, LEI is also mandatory for corporates where total borrowings from banks are more than INR 50 Crore.

Consequence of not obtaining LEI till 30 Sep 2020

In case the eligible entities fail to obtain LEI registration till the due date (30-Sep-2020), in consequence of the failure Authorised Dealer Bank and RBI shall not be able to honour any kind of banking transactions of the defaulter entity till the LEI is obtained.

Further entities having borrowings of INR 50 Cr and not obtaining LEI will not be granted renewal / enhancement of credit facilities.
 
[Source: RBI vide its circular FMRD.FMID.No.10/11.01.007/2018-19 dated 29th November 2018 read with circular FMRD.FMID.No.24/11.01.007/2019-20 dated 27th March 2020]

Entities may kindly confirm from their banks regarding the requirement of LEI. We shall be pleased to assist you in obtaining the same.
 

 

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