Legal information

Cross-border identification of legal entities in securities transactions

In India, any legal entity that participates in financial transactions, such as banks, insurance companies, and non-banking financial companies, is required to obtain an LEI. The Reserve Bank of India (RBI) has made it mandatory for all entities under its regulatory purview to obtain an LEI. Similarly, the Securities and Exchange Board of India (SEBI) has also made it mandatory for all entities that are listed on a stock exchange or are part of the depository system to obtain an LEI.

Additionally, any legal entity that is a counterparty to a financial transaction, such as buying or selling securities, is also required to obtain an LEI. This includes entities that are involved in derivatives trading, commodity trading, and foreign exchange trading, among other types of transactions.

Furthermore, it is required for a issuer, guarantor, borrower or security providers of a security that is being issued to the public, listed on a stock exchange, or included in the depository system. The Reserve Bank of India has mandated the phase-wise implementation of the LEI system for borrowers of banks and FIs in India greater than 5 crores. Entities without an LEI code are not to be granted renewal / enhancement of credit facilities.

Which implementing regulations mandate the use of an LEI code in the India

The Reserve Bank of India has mandated the use of LEIs by all companies trading in Over-the-Counter (OTC) markets for Rupee Interest Rate derivatives, foreign currency derivatives and credit derivatives in India. Mandatory use of LEIs was phased in between August 1, 2017 and March 31, 2018, as per the RBI Notification dated June 1, 2017. In a notification dated November 29 2018, the RBI mandated use of LEIs by all participants, other than individuals, who wish to transact in markets regulated by the RBI. LEI use by large corporate borrowers is also mandated by the Reserve Bank of India, as per the RBI Notification dated November 2, 2017.