Why the Legal Entity Identifier (LEI) is becoming increasingly important for Indian companies

8 julio 2025

In an increasingly interconnected global economy, the unique identification of companies is becoming a central component of regulated financial markets. The Legal Entity Identifier (LEI) fulfils precisely this function: a globally standardised 20-digit code that makes companies identifiable in the context of financial transactions – clearly, transparently and traceably.

But what does this mean for Indian companies? And why is the use of an LEI not only worthwhile from a regulatory perspective, but also strategically?

LEI: A key to greater security and trust

The LEI creates clarity. It ensures that companies can be uniformly identified worldwide, regardless of their location or the financial institutions with which they interact. This brings numerous advantages, particularly in India:

– Clear relationships with business partners:

an LEI makes it easier to verify the identity of counterparties – an essential aspect in preventing fraud or misjudgment.

– Strengthening risk management:

When companies are linked to trusted reference data through an LEI, banks and investors can better assess risks.

– Compliance with regulatory requirements:

Indian authorities such as the RBI or SEBI require proof of an LEI in many cases, for example, for certain transactions or capital market activities.

Where the LEI is used

LEIs have long been an integral part of a wide range of business processes, especially in areas where trust and documentation are key:

1. Finance and loans

When granting loans, investments, or trade financing, banks use LEIs to identify their business partners uniquely.

2. Large-scale payment transactions

As soon as companies process transactions over INR 50 crore via systems such as RTGS or NEFT, an LEI is required by law for both the sender and the recipient.

3. Capital market transactions

Whether issuing securities or participating in funds, an LEI is now a prerequisite for many capital market transactions.

4. Participation in public tenders

In the public sector, the LEI is often required to provide clear evidence of a company’s integrity and legal structure.

Competitive advantage through structure and efficiency

An LEI doesn’t just mean compliance – it also means simplification and sustainability.

– Processes become more efficient because companies no longer have to provide the same data repeatedly for regulatory purposes or when collaborating with partners.

– Data records become more reliable as the LEI contributes to harmonisation, especially in areas such as accounting or financial reporting.

– Cross-border business is made easier because the LEI is internationally recognised and eliminates the need for time-consuming identity checks.

Conclusion: An LEI is more than just a mandatory field

Indian companies are at a turning point: those who address the issue of the LEI promptly will position themselves as future-oriented, reliable market participants, both nationally and internationally.

Applying for an LEI is not only a regulatory necessity, but also a sign of professionalism, strategic foresight and global connectivity.

Recommendation: Companies that regularly engage in significant transactions, international partnerships, or public sector work should actively incorporate the implementation of an LEI into their strategy. Acting now will reduce future friction losses and strengthen your position in international competition.