In a move to improve risk management in the banks, Reserve bank of India (RBI) on Thursday has said that it is mandatory for those corporate borrowers who have an exposure of Rs 5 crore and above will have to obtain 20-digit legal Entity Identifier (lEI) from banks.
Coming out with timeline for implementing the lEI, the central bank has also said that borrowers with fund and non-fund exposure of Rs 1,000 crore and above will have to get the unique code by March 31, 2018.
Those having exposure between Rs 500 crore and Rs 1,000 crore have to obtain the lEI code by June 30 and those having between Rs 100 crore and Rs 500 crore by March 31, 2019 and borrowers with bank credit between Rs 50 crore and Rs 100 crore have been given time to comply with lEI provision by December 2019.
“It has been decided that the banks shall advise their existing large corporate borrowers having total exposures of Rs 50 crore and above to obtain lEI,” the Reserve bank of India said in a notification on Thursday.
This is a unique step taken by the central bank. Earlier, the RBI has also been taking many protective measures to ensure fair practices in all sort of transactions for both corporate borrowers and bankers as well.
The central bank also said that a separate roadmap for borrowers having exposure between Rs 5 crore and up to Rs 50 crore would be issued in due course.
“Borrowers who do not obtain lEI as per the schedule are not to be granted renewal/enhancement of credit facilities", the central bank said in its notification.
The RBI also said, the rules, procedure and documentation requirements may be ascertained from legal Entity Identifier India ltd or lEIIl. “After obtaining lEI code, banks shall also ensure that borrowers renew the codes as per the guidelines,” it said.
