Know, the rules of transactions will change from April 1

     The Reserve Bank of India has made the international system 'Legal Entity Identifier' (LEI) code mandatory for customers sending and receiving funds of Rs 50 crore and above with effect from 1 April 2021 next month. The Reserve Bank has also issued instructions to keep a record of the transaction of the above amount from the Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT) platform.

 

  The adoption of a twenty (20)-digit LEI code exposes the 'who, what, where' from the transaction, ie their whereabouts, identities. This transparency is becoming extremely important day by day for the overall financial market. After suffering the global side effects of the 'Lehman crisis' in the year 2007-08, the governments and regulators of the member countries of the 'G20' group united and brainstormed and felt the need to make the financial transaction process more transparent under risk management. .

    As part of this strategy, the 'G-20 Group' set up the non-profit organization 'Global Legal Entity Identifier Foundation (GLEI F)' in June 2014. The system was named 'Legal Entity Identifier (LEI)' under the banner of this foundation. The Board of Directors of the Foundation regulates recognized (from GLEIF) regional units giving LEI code numbers in various countries.

     LEI Code no. In India To issue 'Legal Entity Identifier India Ltd. (This company is a subsidiary of the Clearing Corporation of India Ltd., a company authorized by the Reserve Bank). Apart from the board, there is a committee which runs the foundation. The board consists of skilled representatives from other member countries, including India. The headquarters of GL EIF are located in the city of Basel, Switzerland. The LEI code number is valid for one year. It can be paid renewed every year.

    By going through the data so far, it is understandable that the LEI system has become or is very popular in countries that are fond, advanced and developing. Whereas LEI is being given equal importance in troubled and crime prone countries. This means that those countries are not interested in bringing transparency in financial transactions or its utility there, or social political conditions do not allow it.

    There are currently more than 17.44 lakh active LEIs in the world. 33959 in Finland, 35688 in Norway, 1.40 lakh in Germany, 1.29 lakh in Italy, 1.29 lakh in Italy, 1.53 lakh in UK, 35277 in Canada, 47996 in India, 39302 in China and more than 2.25 lakh LEIs are active in the United States. While 7 in Afghanistan, 6 in Iran, 28 in Nepal and 60 LEIs are active in Pakistan. GLEIF received revenue of around 125 crores in calendar year 2019 from LEI fees. With this, he spent about Rs 32 crore on salary allowances of his workers and after saving the expenditure on other items, he saved Rs 58 crore.

      Pranatesh Narayan Bajpai

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