🆔 Legal Entity Identifier (LEI) for Cross-Border Transactions: 2025 FAQs for AD Banks & Corporates

🌐 Introduction: What is the Legal Entity Identifier (LEI)?

The Legal Entity Identifier (LEI) is a unique 20-digit code that identifies entities involved in financial transactions globally. Under the Reserve Bank of India’s (RBI) 2022 circular, all cross-border transactions above a certain threshold require reporting of LEI — and once obtained, must be used for all such future transactions, even below the threshold.

This blog breaks down the most important FAQs for 2025 based on RBI’s guidance, FEMA regulations, and cross-border compliance practices — especially useful for Authorized Dealer (AD) banks, corporates, fintech's, and non-resident entities doing business with India.

AD bank officer enters LEI details, ensuring FEMA/RBI compliance, while managing global money transfers in a high-tech banking environment

✅ Q1. When is LEI reporting mandatory for Indian entities?

If a customer (Indian resident) has done any cross-border transaction worth ₹50 crore or more on or after October 1, 2022, the AD bank must:

• Obtain and validate their LEI

• Report the LEI for all future foreign transactions, regardless of the amount
  

📌 Even smaller transactions post-threshold will need LEI tagging.

🏦 Q2. Should banks report LEI for transactions below ₹50 crore?

Yes — if:

• The customer already has an LEI

• OR they crossed the ₹50 crore threshold on or after Oct 1, 2022
  

Once obtained, LEI must be used consistently for all foreign exchange transactions.

🌍 Q3. Do non-residents also need LEI?

It depends:

• For Indian parties, the reporting requirement is strict

• For non-residents, AD banks must refer to Paragraph 2 of RBI's LEI Circular

• The general rule applies mainly to Indian entities
  

However, LEI may still be required for FEMA-covered transactions involving non-residents.

🔄 Q4. Is LEI required for non-resident account transactions in India?

Yes. Any transaction between a resident and a non-resident, even through the non-resident's INR account, is considered a FEMA transaction, so LEI compliance is mandatory.

💳 Q5. What if an AD bank is acting only as a correspondent?

Even as a correspondent bank, the AD bank is responsible for:

• Collecting LEI from the foreign party

• Ensuring compliance as per Paragraph 2 of the RBI circular
  

This includes intermediary roles in SWIFT-based or structured transactions.

📤 Q6. Does LEI need to be added to SWIFT messages?

No. There is no specific instruction from RBI about a particular SWIFT field to capture LEI. However, banks should retain LEI in internal systems and for regulatory reporting purposes.

📦 Q7. For merchanting trade (three-party) transactions, who needs the LEI?

Merchanting transactions often involve:

• Buyer

• Seller

• Intermediary (merchant)
  

🔁 Even though three parties are involved, each payment leg has two parties.

👉 AD banks must obtain and validate LEI for the party involved in each payment leg.

📄 Q8. What about Letters of Credit (LCs), guarantees, or other non-fund facilities?

For these, LEI validation must happen at the time of issuance, not later.

This includes:

• LCs

• Bank guarantees

• Standby letters of credit

• Forward contracts (if involving FEMA transactions)

  
  

📌 Conclusion: LEI is Now a Core Part of FEMA-Compliant Transactions

India’s push for standardized global financial identifiers means that LEI compliance is now non-negotiable for entities engaging in cross-border trade, payments, or investments — especially through AD banks in GIFT City and beyond.

📩 Need help with LEI registration, RBI compliance, or cross-border Contact GIFT CFO — your expert partner for FEMA, IFSCA, and financial regulatory advisory.