In Today’s News:
- Legal Entity Identifier introduced by RBI.
1. Legal Entity Identifier introduced by RBI
The Reserve Bank of India has introduced Legal Entity Identifier(LEI) for large value transactions in centralized payment systems.
(Note: This is a new concept. So it is very important to know such news items for Prelims.)
Prelims GS – Economic Development
- The Legal Entity Identifier (LEI) is a 20-digit number used to uniquely identify parties to financial transactions worldwide.
- It was conceived as a key measure to improve the quality and accuracy of financial data systems for better risk management post the Global Financial Crisis.
- LEI has been introduced by the Reserve Bank in a phased manner for participants in the over the counter (OTC) derivative and non-derivative markets as also for large corporate borrowers.
- It has now been decided to introduce the LEI system for all payment transactions of value ₹50 crores and above undertaken by entities (non-individuals) using Reserve Bank-run Centralised Payment Systems viz. Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).
- In preparation for the wider introduction of LEI across all payment transactions, member banks should:
- advise entities who undertake large value transactions (₹50 crores and above) to obtain LEI in time, if they do not already have one;
- include remitter and beneficiary LEI information in RTGS and NEFT payment messages
- maintain records of all transactions of ₹50 crores and above through RTGS and/or NEFT.
- These directions are issued under Section 10 (2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007) and shall be effective from April 1, 2021.
Click here to view the official release of LEI by the RBI.
Click here for Daily current affairs for the UPSC exams on other dates.