A Legal Entity Identifier (LEI) is mandatory for non-individual borrowers with aggregate exposure of ₹5 crore or more to specified banks and financial institutions. An LEI is a 20-character code that identifies a legal entity in financial dealings. The RBI circular on LEI above 5 crore applies only where the borrower is not an individual and the lenders fall within RBI’s covered categories. Borrowers asked for a code can start with LEI registration in India.
The RBI Circular Behind the ₹5 Crore LEI Rule
The requirement comes from the RBI borrower circular titled Legal Entity Identifier (LEI) for Borrowers, issued on 21 April 2022. It extended RBI’s earlier LEI guidelines to Primary (Urban) Co-operative Banks and NBFCs and fixed ₹5 crore as the borrower threshold.
Source panel Title: Legal Entity Identifier (LEI) for Borrowers Date: 21 April 2022 Reference: RBI/2022-23/34, DOR.CRE.REC.28/21.04.048/2022-23
The circular rolled the requirement out in phases, starting with the largest borrowers and reaching those with exposure of ₹5 crore to ₹10 crore last. That makes it the historical source of the rule, not the latest word on it.
Today, the same expectation sits in RBI’s consolidated lender directions, including Chapter VIII of the Commercial Banks – Credit Risk Management Directions, 2025, and NBFCs have a dedicated LEI chapter in their own Credit Risk Management Directions, 2025. RBI’s LEI circular explains the original rollout, while the consolidated directions set out lenders’ current obligations.
Borrowers and Lenders Covered by the Requirement
The rule applies to non-individual borrowers, such as companies, LLPs and firms, whose exposure to covered lenders reaches the threshold. Being incorporated does not create the obligation by itself; the borrowing test does. For uses of an LEI beyond borrowing, see the wider LEI requirements in India.
The covered lenders fall into two groups:
Banks
- Scheduled Commercial Banks, excluding Regional Rural Banks
- Small Finance Banks
- Local Area Banks
- Primary (Urban) Co-operative Banks
Financial institutions
- All India Financial Institutions: Exim Bank, SIDBI, NHB, NABARD and NaBFID
- NBFCs, including Housing Finance Companies, subject to the applicability and exclusions in RBI’s current directions.
Regional Rural Banks sit outside the circular’s definition of banks, so they are not within this list. The circular also exempts Departments and Agencies of Central and State Governments, meaning administrative bodies such as ISRO, BIS and DGCA. That exemption does not stretch to public sector undertakings registered under the Companies Act or established as corporations under a statute, so those entities follow the general rule.
How Aggregate Exposure Is Calculated
Exposure is measured per borrower, across every covered lender, and the figure is compared with ₹5 crore. Three questions settle it: which types of exposure count, how exposure from different lenders is combined, and whether the sanctioned or the outstanding amount is used. Turnover and the value of individual payments are different measures and play no part in this calculation.
Fund-Based and Non-Fund-Based Exposure
Both funded and non-funded exposure count, and so does investment exposure. In plain terms:
- Fund-based credit: money a lender has advanced or made available, such as term loans and working capital limits.
- Non-fund-based credit: support a lender gives without handing over cash, such as guarantees and letters of credit.
- Investment exposure: a lender’s holdings in instruments issued by the borrower, such as debentures.
The test considers the borrower’s total exposure, which may come from one facility or several. A ₹2 crore facility can sit inside a larger total, and the RBI wording takes in all of these exposure types without listing facility-type exclusions.
Exposure Across Multiple Lenders
Exposure to covered lenders is added together for the same borrower, so a borrower can cross ₹5 crore without any single lender reaching it.
Hypothetical example. Company A holds a term loan with a bank, sanctioned at ₹3 crore, and a working capital line from an NBFC, sanctioned at ₹2 crore. Added together, the two facilities come to ₹5 crore, which meets the threshold.
Each facility is counted once, and both belong to the same borrowing entity. Each legal entity is assessed on its own borrowing, so loans taken by a different company are not folded into Company A’s total.
Sanctioned Limits and Outstanding Balances
The test uses the aggregate sanctioned limit or the aggregate outstanding balance, whichever is higher. Low utilisation therefore does not by itself keep a borrower under the line. Lenders may establish the position from their own records, from RBI’s CRILC database or from a declaration obtained from the borrower.
Hypothetical example. Company B has a bank cash credit limit of ₹4 crore with ₹1.5 crore drawn, and an NBFC term loan sanctioned at ₹2 crore with ₹1.7 crore outstanding.
- Aggregate sanctioned limits: ₹6 crore
- Aggregate outstanding balances: ₹3.2 crore
- Higher figure: ₹6 crore, which is above ₹5 crore
Company B is within the rule even though it has drawn little of what it was sanctioned.
When Must a Borrower Obtain an LEI?
A covered borrower must obtain an LEI when its aggregate exposure reaches ₹5 crore. That is today’s requirement under RBI’s lender directions, which tell banks to make sure borrowers at that level hold the code.
The final deadline in the phased rollout was 30 April 2025, for borrowers with exposure of ₹5 crore to ₹10 crore. Larger borrowers had earlier dates. The current directions do not specify an additional grace period for borrowers who reach the threshold after the rollout deadlines.
Lending Restrictions When a Required LEI Is Missing
A borrower that has not obtained a required LEI from an authorised Local Operating Unit (LOU) faces limits on what lenders may do for it:
- New exposure: the lender cannot sanction any new facility.
- Renewal: an existing facility cannot be renewed.
- Enhancement: an existing limit cannot be increased.
The restriction attaches to these three lending actions. The provisions reviewed do not describe account freezes, immediate loan cancellation, repayment demands or fines on the borrower. A missing identifier is also a different matter from an existing LEI that needs renewing: RBI separately directs banks to ensure borrowers renew their codes in line with GLEIF guidelines.
Obtaining and Maintaining an LEI for Borrowing
When a lender asks for an LEI, start by confirming which legal entity is the borrower, because the code belongs to that entity and not to its owners or group. The second step is checking an existing LEI, since a legal entity holds only one code. If none exists, obtaining an LEI number comes next, and if the code has lapsed, renewing an LEI restores it. LEI24 is a registration agent that facilitates these services through Nasdaq CSD SE.
LEI renewal involves annual revalidation of the entity’s reference data. RBI also requires covered lenders to ensure borrowers renew their codes in line with GLEIF guidelines.
- Confirm the borrowing entity’s exact legal name and registration details.
- Search for an existing LEI before applying.
- Register for a new LEI, or renew a lapsed one.
- Give the LEI to each lender that requests it.
- Put the annual renewal date in the calendar.
If a lender’s request is already open, run the LEI search first so you know whether to register or renew.
Frequently Asked Questions
Does a Borrower Need a Separate LEI for Each Lender?
A borrower uses a single LEI for every lender. The code identifies the borrowing legal entity, not any one relationship, so the same LEI can be supplied to each bank or NBFC that asks for it.
Is the ₹5 Crore LEI Threshold Based on Turnover?
The threshold looks at borrowing exposure to covered lenders, not annual turnover. A company with high turnover but little borrowing falls outside this borrower rule, and turnover alone never shows whether the borrower rule applies.
Is an LEI Required at Exactly ₹5 Crore?
The threshold includes ₹5 crore itself, so a covered borrower whose aggregate exposure to covered lenders is exactly ₹5 crore needs an LEI. The rule applies at ₹5 crore and above, not only above it.
