Legal Entity Identifier Number (LEI): Meaning And How to Apply?

• A legal entity identifier is mandatory for high-value RTGS and NEFT transactions by non-individuals in India.
• LEI helps standardise global entity identification, improving regulatory compliance and financial transparency.
• LEIL is the RBI-approved issuer in India, and the LEI must be renewed annually for continued validity.

If your business engages in financial transactions, especially those involving large-value transfers or cross-border operations, you may have come across the term " legal entity identifier" . This code is now mandatory for many non-individual entities operating in India and abroad.The legal entity identifier simplifies the process of recognising parties in financial transactions, improving risk management, and enhancing transparency. This article offers a quick guide on what is LEI number is, the structure of an LEI code, and how to apply for one.

Introduced as a global ISO standard, the LEI code is a 20-character alphanumeric identifier that allows each legal entity to be uniquely identified on a public database. The legal entity Identifier code supports the global initiative to create a standardised system for tracking financial activity. Whether you are a company, trust, or fund, the LEI code ensures that your financial footprint can be easily tracked and validated.The Global Legal Entity Identifier Foundation (GLEIF) manages the LEI code system at the global level. In India, it is issued by Legal Entity Identifier India Limited (LEIL) under the oversight of the Reserve Bank of India (RBI).
This system improves data quality in financial markets by linking entities to verified legal data. You can think of it as a digital signature that helps others identify your business correctly, particularly in high-value financial dealings.

Understanding what is LEI is important for those completing high-value RTGS and NEFT transactions in India. Since April 1st, 2021, the RBI mandates the mention of the legal entity identifier for all non-individuals conducting transactions of ₹50 crore or more through RTGS or NEFT. The rule applies to both initiators and recipients of such transactions.Therefore, any legal identity, including banks, mutual funds, partnership companies, trusts, asset management companies, and other financial institutions that are parties to such transactions, must have a valid LEI number. This policy move enhances security and reduces fraud by improving traceability. If your organisation carries out large-value transfers via these channels, obtaining and using an LEI code is mandatory.

Now that you know the meaning of LEI codes, let’s understand the structure of these codes. The structure of LEI is the same globally. It consists of 20 characters and follows the following format:

• Characters 1–4 : Identify the issuing Local Operating Unit (LOU).
• Characters 5–6 : Always set as '00'.
• Characters 7–18 : Unique to each legal entity, assigned based on standard rules.
• Characters 19–20 : Two check digits, used for verification.

This structure ensures global uniformity, making the legal entity identifier code a secure and widely accepted identification system.

You can apply for your legal entity identifier code through any GLEIF-accredited Local Operating Unit. The Legal Entity Identifier Limited (LEIL) manages the issuance and renewal process in India. To apply for your LEI code, simply follow these steps: Step 1: Access the LEIL Portal Start by visiting the official LEIL website . Go to the "Downloads" tab and review the document checklist relevant to your entity type. This ensures you are prepared with the right documents before beginning the application process. Step 2: Appoint an Authorised Person Designate an authorised representative to oversee the LEI application. This person must be appointed through a board resolution, power of attorney, or voluntary declaration. They are responsible for creating the user account and must use an official email ID to complete the process. Step 3: Identify Primary and Secondary Users The primary user will fill out and submit the online application. You must also mention secondary users, along with their e-mail IDs. These individuals may assist with updates and correspondence related to the LEI registration. Step 4: Complete the LEI Application Form The application form has five parts, including company information, direct parent, ultimate parent, payment, and document upload. Fill each section carefully. You can begin the process online and save your progress as needed before submission. Step 5: Make the Payment Choose to pay online through the payment gateway or via a demand draft . After successful payment, LEIL generates a reference number. An email is sent listing the required documents for submission, which must be uploaded or couriered. Step 6: Submit the Documents Upload scanned documents as specified or send them by courier to LEIL’s Mumbai office. Ensure the total file size does not exceed 40 MB. Include proof of identity, company registration documents, and other legal paperwork. Step 7: Verification by LEIL LEIL will review the application and the documents submitted. The applicant will be informed and asked to revise the application or provide supporting documentation if additional information is required. Step 8: Receive Your LEI Code Once the application and documents are approved, LEIL will issue the LEI code and send it to your registered email ID. To enable transparent and compliant financial transactions, you must share this code with your financial partners and banks.

The legal entity identifier is valid for one year from its date of issuance. To renew:

• Visit the LEIL portal and select "Modify and Renewal."
• Enter your existing LEI code; details will auto-fill.
• Check the LEI renewal box, make changes if needed.
• Make the required payment and upload supporting documents.

On successful verification, your LEI code will be renewed for another year.

Understanding the meaning of LEI codes makes their multiple benefits clear. We’ve listed the benefits of LEI verifications below to recap once more:

• Increased Transparency : It helps identify entities accurately and improves visibility in global financial systems.
• Regulatory Compliance : You must fulfil requirements under the RBI and international financial reporting standards.
• Better Risk Management : It helps connect data sets and analyse exposure.
• Streamlined Reporting : It reduces errors and delays in transaction reporting.
• Global Recognition : It makes it easier for Indian firms to do business internationally.
• Operational Efficiency : It simplifies identity checks and saves time and costs.

Securing a legal entity identifier code is essential if you deal with large financial transactions or plan to expand globally. It gives your organisation a distinct digital identity and helps streamline regulatory reporting and risk management. If your business has a total loan exposure of more than ₹5 crore, you need a valid LEI to ensure compliance. You can apply for your LEI code online through the Legal Entity Identifier Limited website to ensure compliance.Apart from compliance, easy access to business funding is also essential. Business loans from Aditya Birla Capital.