FIEO Partners With Rubix Data Sciences to Facilitate Legal Entity Identifier (LEI) Issuance to Indian Exporters. The Federation of Indian Export Organisations (FIEO) has signed a Memorandum of Understanding (MoU) with Rubix Data Sciences Pvt. Ltd (Rubix) to facilitate Legal Entity Identifier (LEI) issuance to Indian exporters and entities. Rubix Data Sciences is a business intelligence company offering a technology and analytics-based B2B Risk Management and Monitoring platform. In April 2022, the Global Legal Entity Identifier Foundation (GLEIF) and the Legal Entity Identifier India Ltd. (LEIL) appointed Rubix as India’s first LEI Validation Agent to help clients obtain LEIs.
As part of the MoU with FIEO, Rubix will handhold Indian exporters through the documentation process and facilitate speedy and cost-effective LEI issuance. Rubix will also work with exporters to ensure the timely renewal of LEIs to keep their LEIs active.
What is the Legal Entity Identifier (LEI)?
The Legal Entity Identifier (LEI) is a 20-character, alphanumeric code that uniquely identifies a legal entity or structure that is a party to a financial transaction in any jurisdiction. The LEI connects to key reference information that enables a clear and unique identification of legal entities participating in financial transactions.
The LEI was developed as a collaborative effort by regulators across the world to push transparency in transactions across markets, products, and regions. Businesses and organisations must mandatorily quote their LEI for many types of transactions when doing business abroad.
The LEI data pool can be regarded as a global directory that greatly enhances transparency in the global marketplace. Already 97,000+ Indian businesses have LEIs and feature in this global directory of validated entities.
Regulatory Mandates Related to LEI in India
Regulators in India, including the RBI, SEBI, and IRDAI, have mandated quoting the LEI for various types of transactions.
RTGS/NEFT Transactions: The RBI has mandated the LEI Code for all payment transactions valued at ₹50 crores and above undertaken by entities (non-individuals) for Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).
Cross Border Transactions: The RBI has mandated the LEI Code for cross-border transactions such as capital or current account transactions of ₹50 crore and above. The timeline to obtain LEI Number for this purpose is October 1, 2022.
Corporate Borrowing: The RBI has mandated the phase-wise implementation of the LEI system for non-individual entities borrowing ₹5 crores and above from banks, Non-Banking Financial Companies (NBFCs), and Primary Urban Cooperatives (UCBs) in India. Entities without an LEI Code are not to be granted renewal or enhancement of credit facilities.
Insurers/Corporate Borrowers: The IRDAI has mandated the implementation of the LEI system for all insurers and their corporate borrowers.
OTC Derivatives Markets: The RBI has mandated the implementation of the LEI system for all participants in the Over-the-Counter (OTC) markets for Rupee Interest Rate derivatives, foreign currency derivatives, and credit derivatives.
Non-derivative Markets: The RBI has mandated the phase-wise implementation of the LEI system for non-derivative markets, including Government securities markets, money markets, and non-derivative forex markets (cash, tom, and spot transactions).
Eligible Foreign Entities: The SEBI has mandated LEI Code for Eligible Foreign Entities (EFEs) in the commodity derivatives market.
Benefits of Obtaining the LEI:
· LEI is a global identifier that provides international recognition for your business or organization.
· It is standardised across countries.
· It serves as an essential identifier in cross-border (international) transactions and helps cut down risks.
· LEI helps establish identities across the value chain for the sake of security and for obtaining finance.
· It confers global credibility on businesses, financial institutions, and organisations.
· Micro, Small, and Medium Enterprises (MSMEs) that obtain LEIs can stand out amongst their peers in the domestic and global marketplace.
· You can display the LEI on your website, letterheads, business cards, marketing material, and documents.
· The LEI gives exporters and importers global recognition with prospective buyers and sellers in overseas markets.
· The LEI makes it easy for banks to identify you as an exporter or importer when you are transacting internationally.
· On online marketplaces, the LEI in your profile helps potential overseas buyers know that your existence has been validated.
· With the expansion of B2B e-commerce, LEI is being increasingly used for better identification of buyers and sellers on online marketplaces. It drastically cuts time in KYC and onboarding.
· Issued LEIs can be easily searched on the GLEIF database, either on its web interface or via API.
· LEI searches always provide updated results, as the LEI has to be renewed annually. LEI renewal requires validation of the latest corporate details of the legal entity.
During the signing of the MoU, Dr Ajay Sahai, Director General & CEO, FIEO said that “obtaining the LEI through Rubix will help FIEO members build trust with counterparties, financial institutions, and other stakeholder organisations, regardless of the sector, because it serves as an essential identifier in both cross-border and domestic transactions and helps filter out fraudulent and fake entities that may try and register as suppliers, customers, distributors or dealers.”
“Rubix recognizes the critical role of exporters in driving India’s socio-economic growth. Given that the LEI is a global identifier, it is especially important for Indian SME exporters to obtain the LEI so as to stand out and be recognised in the global marketplace. It is a privilege for Rubix to assist Indian exporters in the LEI application and validation process via this partnership with FIEO, “said Mohan Ramaswamy, Co-Founder and CEO of Rubix Data Sciences.
As part of the MoU signing ceremony, FIEO in association with Rubix organised an Online Awareness Session on RBI Guidelines on LEI Registration in India which was attended by more than 40 exporters.