A legal entity identification number (LEI) is a standardised reference number used in the global financial market. LEI stands for Legal Entity Identifier. It is an alphanumeric code that uniquely identifies the legal entity to which IPO transactions (securities) are made.
With the advent of globalisation in India, The Reserve Bank Of India has made lei registration mandatory for business entities with aggregate non-fund-based and fund-based credit exposure of over INR 50 crore. This post will shine a light on the Legal Entity Identification number in India and how to register for the same.
Significance of Legal Entity Identification Number:
The legal entity identifier (LEI) is a 20-digit number provided by the Reserve Bank of India (RBI) for each company in India. It is used for identification and easy access to information about a particular company from anywhere in the world.
The LEI also helps companies to identify their counterparties quickly and easily. The LEI also helps mitigate systemic risk, increase transparency and reduce counterparty credit risk in the global financial system.
In India, the LEI is used by banks, regulators and other financial players to ensure transparent and fair trade practices in all sectors of the economy. The LEI can be obtained by registering with any of the three authorised registrars – CRISIL Infrastructure Advisory Pvt Ltd., ICRA Limited or Credit Information Bureau India Limited (CIBIL). Apart from the three authorised registrars, you can also approach third-party LEI providers to obtain your LEI number faster.
What Are The Prerequisites To Applying For LEI In India?
Here is some prerequisite that you should consider before applying for an LEI number:
- Your business should be registered with the Registrar of Companies (RoC). If it is not registered with RoC, then you cannot apply for an LEI number, as your company would not be able to get the same if RoC does not recognise it as a legal entity or does not exist in their database at all.
- You must have a PAN card issued by the Income Tax Department or any other valid PAN number issued by any other department under the Government of India or State Government which can be used for identification purposes without financial implications.
What Is The Best Way To Obtain LEI In India?
As previously mentioned, you can approach CRISIL Infrastructure Advisory Pvt Ltd., ICRA Limited or Credit Information Bureau India Limited (CIBIL) for lei registration. Still, the process can be long drawn and tedious.
The best option for any business entity to obtain a Legal Entity Identifier is to approach a third-party LEI provider. The right third-party LEI provider can arrange a Legal Entity Identifier number within 24 hours. There are hardly three steps in this registration process to improve things.
All you have to do is head to the LEI provider’s website, fill up the registration form, make the payment, and you’ll receive your LEI number via email.
Final Thoughts:
There is a reason why legal entity identifiers are so critical in the global and Indian financial markets. That reason is that consumers need to be able to identify companies, organisations, and institutions. Ultimately, this is what leads to trust in a company. And when you don’t register for these identifiers and codes, your consumers don’t know who you’re doing business with and how you operate.
