In view of the financial crises across the world, LEI has provided a way to identify financial connections so that regulators and firms can better understand the true nature of risk exposures across the financial system. In India, LEI has been mandated across various sectors in the financial markets including derivatives and non-derivatives market and also for large corporate borrowers.
This is being implemented in a phased manner. Since it has been made mandatory for large corporate borrowers to obtain LEI, banks should, apart from advising such borrowers to obtain LEI, encourage such borrowers to obtain LEI for their parent entity as well as all subsidiaries and associates.