Legal Entity Identity or LEI is one of the safest and the most successful way of tracking the past banking history of an organization that you are planning to start a business with. Well thanks to RBI that brought about this concept of providing corporates with an LEI Code which is basically a alpha numerical code of 20 Digits provided to all the companies that get registered with LEI.
Now there are a lot of things that are related to LEI Number of an organization which will be elaborated further. Now let’s understand why this code is so very important for the country, the corporates and the Banks as well.
The importance of LEI for the country, corporates and banks
When a huge sum of money is taken as loan from a bank to be more precise any loan that is above 5 Crore INR can be considered as huge from banking point of view LEI Registration is mandatory. It is RBI that brought about this idea in 2016 and it was accepted by the Finance Ministry of the country as a measure to stop corruption that is induced by corporates in the society where an organisation takes a huge amount of loan from a bank and does not pay back.
Then these people or organizations go to such an extent when they do the same with other banks as well. So when an organisation gets registered with the LEI and has a LEI Code this simply cannot happen as there will be a track of all the credits that an organization has taken from a bank in terms of a loan or an overdraft and also the past credit history as well. So now no one can manipulate data in order to get loans from the bank as everything is already there.
So now the money that can be invested by a bank for its growth which in turn will bring foreign exchange for the country stays safe. Apart from that the banks also remain safe from losses and corporates who are looking for genuine partners also get what they are looking for.
As now as you know about the importance of an LEI Code just make sure that you ask for the LEI of an organization before you have business with them. Being aware of things happening around is very important these days to avoid losses.