What changed
The LEI mandate, previously applicable only to banks and FIs, now covers Primary (Urban) Co-operative Banks and NBFCs. A phased timeline is introduced: borrowers with exposure above ₹25 crore need LEI by April 30, 2023; ₹10-25 crore by April 30, 2024; and ₹5-10 crore by April 30, 2025.
What it means for you
Lenders must update their systems to track LEI compliance for all non-individual borrowers with aggregate exposure of ₹5 crore and above, including fund and non-fund based exposure. Failure by borrowers to obtain LEI will block new sanctions, renewals, or enhancements, except for central/state government agencies. This tightens credit discipline and enhances transparency in large exposures.
What you must do
- Identify all non-individual borrowers with aggregate exposure of ₹5 crore and above using internal records, CRILC, or borrower declarations.
- Communicate the phased LEI deadlines to affected borrowers and advise them to approach authorized Local Operating Units (LOUs).
- Update credit sanction workflows to reject new exposure, renewal, or enhancement for borrowers without valid LEI codes.
- Ensure compliance for UCB and NBFC exposures now covered under the mandate.
- Monitor CRILC data to verify aggregate exposure across lenders.
Who it affects
Scheduled Commercial Banks (excluding RRBs), All India Financial Institutions, Small Finance Banks, Local Area Banks, Primary (Urban) Co-operative Banks, Non-Banking Financial Companies (including HFCs)
What is the definition of 'exposure' for LEI purposes?
Exposure includes all fund-based and non-fund-based credit and investment exposure. The aggregate sanctioned limit or outstanding balance, whichever is higher, is considered.
What happens if a borrower fails to obtain LEI by the deadline?
Lenders must not sanction any new exposure, renewal, or enhancement of existing exposure for such borrowers. Central and state government agencies are exempt from this restriction.
Are existing borrowers with exposure below ₹5 crore affected?
No, the mandate applies only to non-individual borrowers with aggregate exposure of ₹5 crore and above. Lower exposures are not covered.