What changed
RBI has mandated LEI for all capital or current account transactions under FEMA of ₹50 crore and above per transaction, effective October 1, 2022. Previously, LEI was required only for OTC derivatives, non-derivative markets, large corporate borrowers, and large-value payment system transactions. Now, cross-border transactions also fall under the LEI requirement.
What it means for you
Banks must update their systems to capture and validate LEI for high-value cross-border transactions. This enhances transparency and reduces risk in foreign exchange dealings. Non-compliance could lead to operational delays, but RBI allows processing for non-resident entities without LEI to avoid disruption.
What you must do
- Update systems to capture LEI for all resident non-individual entities undertaking FEMA transactions of ₹50 crore and above per transaction from October 1, 2022.
- Validate each LEI against the global GLEIF database before processing transactions.
- Advise clients with large-value FEMA transactions to obtain LEI from LEIL or other GLEIF-accredited LOUs well before the deadline.
- Encourage voluntary LEI submission for transactions below ₹50 crore to build compliance readiness.
Who it affects
AD Category I banks, Resident non-individual entities (companies, LLPs, trusts) undertaking cross-border transactions, Non-resident entities (as counterparties, though LEI is not mandatory for them)
What is the threshold for mandatory LEI in cross-border transactions?
The LEI is mandatory for resident non-individual entities for any capital or current account transaction under FEMA of ₹50 crore and above per transaction, effective October 1, 2022.
What if a non-resident entity does not have an LEI?
AD Category I banks may process the transaction without LEI for non-resident counterparts to avoid disruption. However, banks should encourage voluntary submission of LEI.
Where can entities obtain an LEI in India?
Entities can obtain LEI from Legal Entity Identifier India Ltd. (LEIL), which is recognized by RBI and accredited by GLEIF. Details are available at https://www.ccilindia-lei.co.in.