{"id":1147,"date":"2022-05-16T09:53:57","date_gmt":"2022-05-16T09:53:57","guid":{"rendered":"https:\/\/www.rubixds.com\/?p=1147"},"modified":"2022-05-16T09:53:57","modified_gmt":"2022-05-16T09:53:57","slug":"spotlight-on-india-a-rise-in-lei-mandates-offers-msmes-a-springboard-for-growth","status":"publish","type":"post","link":"https:\/\/rubixds.com\/blog\/spotlight-on-india-a-rise-in-lei-mandates-offers-msmes-a-springboard-for-growth\/","title":{"rendered":"Spotlight on India: A Rise in LEI Mandates Offers MSMEs a Springboard for Growth"},"content":{"rendered":"<h4><span style=\"color: #808080;\">Growing regulatory enforcement of the LEI across India promotes an identifier that can open doors to global trade and finance opportunities for the region\u2019s MSMEs<\/span><\/h4>\n<p><strong>Author: Xue Tan<\/strong>, Head of Business Development for Asia region at the Global Legal Entity Identifier Foundation (GLEIF)<\/p>\n<p>The Legal Entity Identifier\u2019s (LEI) star is rising in India. A wave of mandates from multiple regulators has harnessed the LEI\u2019s unique ability to deliver transactional trust and transparency across different applications, and LEI adoption is growing as a result. Yet, in India\u2019s economy, which is fuelled by Micro, Small, and Medium Enterprises (MSMEs), there is another very welcome side-effect of regulation driving increased LEI issuance throughout the country. The increasing normalization of the LEI as an integral tool for enabling business means that more MSMEs than ever have exposure and enhanced access to an identifier that could help them formally verify their identity across borders. As a result, it opens up their potential to engage in global trade and finance opportunities \u2013 many for the first time.<\/p>\n<p>This blog post summarizes regulatory developments concerning the LEI in India. It also explores how growing country-wide acceptance of a universally recognized and trusted entity identifier could further strengthen regional MSMEs, which are already responsible for nearly a third of India\u2019s gross domestic product.<\/p>\n<p><strong>Mandates Gain Momentum in India<\/strong><\/p>\n<p>Proactive advocacy for the LEI has been building in India over the past five years and regulatory momentum, together with LEI issuance, continues to grow. Three prominent regulatory authorities have issued six LEI mandates and one recommendation during that time.<\/p>\n<p>The Reserve Bank of India (RBI) was an early supporter of the LEI and introduced it back in 2017 as a necessary requirement for all participants in Over-the-Counter (OTC) markets for Rupee Interest Rate derivatives, foreign currency derivatives, and credit derivatives in India. In November of the same year, RBI followed up with the further phase-wise introduction of the LEI for all large corporate borrowers of banks in India. As a result, since the end of December 2019, entities without an LEI are not to be granted renewal or enhancement of credit facilities with exposure totaling \u20b9 50 crore or more. A separate LEI roadmap for borrowers having exposure between \u20b9 5 crore and up to \u20b9 50 crores has been released end of April 2022.<\/p>\n<p>In subsequent years, the RBI has proceeded to issue a further three mandates:<\/p>\n<ul>\n<li>In November 2018, a phase-wise implementation of the LEI was introduced for Non-derivative markets, including the Government securities markets, money markets, and non-derivative forex markets.<\/li>\n<li>In January 2021, and in a move that was the first of its kind, the LEI became mandatory in all payment transactions totaling \u20b9 50 crore and more undertaken by entities for Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT). This move is very timely \u2013 and may potentially set a precedent &#8211; at a global level, given the wider interest in making cross-border payments more transparent and inclusive.<\/li>\n<li>Most recently, in December 2021, the LEI was mandated in all cross-border transactions such as capital or current account transactions of \u20b9 50 crore and above. The deadline to obtain an LEI for this purpose is 1 October 2022.<\/li>\n<\/ul>\n<p>Another regulatory body that has recognized the opportunity to benefit from the LEI is the Securities Exchange Board of India. It recommended LEI usage for Eligible Foreign Entities in the commodity derivates market in October 2018. The Insurance Regulatory and Development Authority of India (IRDAI) followed in June 2020 with a mandatory requirement for the LEI for all insurers and their corporate borrowers with transactions over \u20b9 50 crore.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-1148\" src=\"https:\/\/www.rubixds.com\/wp-content\/uploads\/2022\/05\/A-Rise-in-LEI-Mandates-Offers-MSMEs-a-Springboard-for-Growth.jpg\" alt=\"Spotlight on India: Mandates Driving LEI Usage\" width=\"955\" height=\"2337\" \/><\/p>\n<p><strong>A Sustained Upturn in LEI Issuance<\/strong><\/p>\n<p>The combined impact of these LEI mandates and recommendation is that a wide base of Indian companies and organizations are now required to obtain an LEI for the first time. The resulting increase in demand for LEIs across India in recent years is reflected in India\u2019s position within GLEIF\u2019s top five growth jurisdictions for LEI issuance in 2020 and 2021. Across those two years, the country marked 45.6% and 62.4% growth in annual issuance, respectively.<\/p>\n<div style=\"overflow: hidden;height: 1px\">Check more news <a href=\"https:\/\/rubixds.com\/care-sunt-cele-mai-noi-filme-porno-hd-disponibile-gratuit\/\">Care sunt cele mai noi filme porno HD disponibile gratuit<\/a>, <a href=\"https:\/\/rubixds.com\/unde-sa-gasesti-cele-mai-bune-oferte-gratis\/\">Unde S\u0103 G\u0103se\u0219ti Cele Mai Bune Oferte Gratis<\/a><\/div>\n<p>By the end of 2021, GLEIF reported that the total number of LEIs issued across the country had reached 76,432. And GLEIF\u2019s expectation is that demand will continue to climb exponentially throughout this year and beyond as more and more entities register for LEIs as a result of existing and future mandates.<\/p>\n<p>In a separate but complementary development, the <strong>Global Legal Entity Identifier<\/strong> System has recently expanded to service a further anticipated increase in regional LEI demand. In March 2022, <a href=\"https:\/\/www.rubixds.com\/lei\/\"><strong>Rubix Data Sciences<\/strong><\/a> announced that it had become the first Validation Agent in India. Rubix will work alongside <strong>Legal Entity Identifier India Ltd<\/strong>. (LEIL), a GLEIF accredited LEI issuer and a wholly-owned subsidiary of the Clearing Corporation of India Ltd., to help clients obtain LEIs.<\/p>\n<p>The Validation Agent framework was launched by GLEIF in September 2020 to enable financial institutions, certification authorities, and fintech organizations to leverage their Know Your Customer and Anti-Money Laundering onboarding procedures to simplify their clients\u2019 access to LEIs. Validation Agents play an important role within the Global LEI System. By equipping their client base with LEIs, they promote financial inclusion while creating value and opportunities such as cross-border supply chain relationships thanks to easier counterparty verification and simplified cross-border payments.<\/p>\n<p><strong>What are the Broader Benefits for MSMEs?<\/strong><\/p>\n<p>So how does the advancing regulatory landscape for LEIs, together with increased LEI issuance, provide a foundation for MSME growth in India?<\/p>\n<p>MSMEs represent a significant and dynamic part of the Indian economy and make an important contribution to the economic and social development of the country. According to official sources, at the last count (in 2015-16) there were an estimated 63.39 million MSMEs in India, and in 2018-19, this base was responsible for generating 30.27% of GDP across the country. Yet many struggle to trade internationally or access finance as a result of not being able to prove their identity or trading history to the outside world.<\/p>\n<p>With the growing \u2018normalization\u2019 of the LEI as a critical business enabler across the Indian economy, thanks to regulatory enforcement in certain transactions, an increasing number of MSMEs are being exposed to it or even obliged to obtain one. At the very least, awareness is growing, and access is certainly becoming easier, too, with the local activation of the Validation Agent framework. The ability to obtain robust business credentials, including a trusted business identity that can be used digitally, could be transformational for many small businesses, thanks to the many associated benefits. The simplification of international trade partnerships, the possibility of credit finance, and greater access to financial services are just a few of the most notable. And let\u2019s not overlook the impact that strengthening the financial and supply chain inclusion of India\u2019s MSMEs will have on the country\u2019s economy. An increase in the flow of inbound capital will contribute significantly to India\u2019s economic development.<\/p>\n<p>So while it is the intention of India\u2019s regulators to harness the LEI\u2019s advantages to enhance trust and transparency within the banking and financial services ecosystems, it is important to recognize \u2013 and applaud &#8211; the wider economic benefits they are initiating by driving its adoption throughout the country. They are potentially setting the stage for Indian MSMEs to thrive in a global economy by promoting the widespread adoption of a trusted and verified identity that is recognized across international borders.<\/p>\n<p>&nbsp;<\/p>\n<p>This article was originally published on<strong> <a href=\"https:\/\/www.gleif.org\/en\/newsroom\/blog\/number-7-in-the-lei-lightbulb-blog-series-spotlight-on-india-a-rise-in-lei-mandates-offers-msmes-a-springboard-for-growth\">GLEIF.org<\/a><\/strong> on May 12, 2022.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Growing regulatory enforcement of the LEI across India promotes an identifier that can open doors to global trade and finance opportunities for the region\u2019s MSMEs Author: Xue Tan, Head of Business Development for Asia region at the Global Legal Entity Identifier Foundation (GLEIF) The Legal Entity Identifier\u2019s (LEI) star is rising in India. A wave [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_gspb_post_css":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[202],"tags":[29,30,31,32],"class_list":["post-1147","post","type-post","status-publish","format-standard","hentry","category-blog","tag-gleif","tag-india","tag-legal-entity-identifier","tag-msme"],"blocksy_meta":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/rubixds.com\/blog\/wp-json\/wp\/v2\/posts\/1147","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rubixds.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rubixds.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rubixds.com\/blog\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/rubixds.com\/blog\/wp-json\/wp\/v2\/comments?post=1147"}],"version-history":[{"count":0,"href":"https:\/\/rubixds.com\/blog\/wp-json\/wp\/v2\/posts\/1147\/revisions"}],"wp:attachment":[{"href":"https:\/\/rubixds.com\/blog\/wp-json\/wp\/v2\/media?parent=1147"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rubixds.com\/blog\/wp-json\/wp\/v2\/categories?post=1147"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rubixds.com\/blog\/wp-json\/wp\/v2\/tags?post=1147"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}