Legal Entity Identifier
Also written LEI · Legal Entity Identifier (LEI)
A 20-character alphanumeric code that DPs must capture in a non-individual's demat account, under an RBI direction, to identify parties to large-value payment transactions of Rs 50 crore and above.
In plain language
A large payment can move between two companies. Regulators want to know exactly who is on each side of it. A name alone can be ambiguous. So they use one clear, global code instead.
That code is the Legal Entity Identifier (LEI). It is a 20-character alphanumeric code. RBI ordered it for large-value transactions by non-individual entities. DPs must record it in the demat account wherever it applies.
How it works
From Chapter 4: DPs must follow RBI Circular No. RBI/2020-21/82 dated 5 January 2021, which introduced the LEI as a new field. The LEI is a 20-character alphanumeric code used to identify parties to Large Value Transactions — defined as transactions of Rs 50 crore and above, or as otherwise defined by RBI — undertaken by non-individual entities, across all payment transactions.
DPs are required to capture the LEI in the demat account wherever applicable. This sits alongside a related RBI initiative in the same chapter: the VID (a 16-digit numeric field NSDL introduced as an alternative to sharing the Aadhaar number directly, for privacy).
A worked example
Meridian Infra Holdings Pvt Ltd, a corporate demat account holder, is a party to a large-value payment transaction of Rs 62 crore — above the Rs 50 crore threshold. Because Meridian is a non-individual entity, its DP is required to capture Meridian's 20-character LEI code in its demat account records, so that regulators can unambiguously identify it as a counterparty to the transaction.
Had the same account belonged to an individual investor, or had the transaction been for, say, Rs 30 crore — below the threshold — the LEI requirement would not apply to that transaction.
Why NISM asks about it
Chapter 4 covers the LEI directly after the Aadhaar-seeding and VID discussion, as part of DP-level KYC and identification enhancements. Expect the 20-character code, the Rs 50 crore threshold, and the fact that it applies to non-individual entities to be tested together.
Common exam traps
- LEI applies to non-individuals, not individual investors.
- The threshold is Rs 50 crore and above — do not confuse it with other unrelated Rs-crore thresholds elsewhere in the workbook (like DP net worth figures).
- LEI is 20 characters; VID is 16 digits — two different RBI-driven identifiers introduced in the same part of the chapter, easily swapped.
- The requirement traces to an RBI circular, not a SEBI or depository Bye-Law.
Check yourself
1.A demat account number consists of:
- a)A 10-digit client ID only
- b)8-digit DP-ID plus 8-digit client account number, 16 digits in all
- c)12-digit ISIN plus 4-digit client code
- d)A 20-character alphanumeric code
Show the answer
Answer: (b) 8-digit DP-ID plus 8-digit client account number, 16 digits in all
In case of CDSL, the account number has two parts, i.e., 8-digit DP-ID (identification number of Depository Participant) and 8-digit client account number. The workbook's example: 13015600 00000082.
Similarly, an account with the NSDL will have 16-digit number with the first 8 digits indicating the DP-ID starting with IN300100 and the last 8 digits giving the client id i.e. 10005678.
Both depositories therefore use 16 characters; the NSDL DP-ID begins with "IN". Together this number is unique across depositories.
Option D describes the LEI — a 20 character alpha numeric code used to identify parties for Large Value Transactions i.e. for value of transaction ₹50 crore and above.
Option C confuses the ISIN, which identifies a security rather than an account.
How the number is generated: on receipt of a valid application form which is complete in all respects and duly signed by the applicant, the DP should verify its contents to his satisfaction. If, after verification, the DP accepts the application and the Rights and Obligations document is signed, the DP has to enter the information on the application form into the depository participant system. The system then generates a client account number which should be referenced by the client for all its transactions.
And what follows: the DP should provide a copy of account opening confirmation report to the client for his reference and verification about the correctness of details, and after opening the demat account, the client master report should be sent to the client at the address given in the account opening form.
One more identifier worth distinguishing: the VID is a 16-digit numeric field which can be used by Aadhaar holder in lieu of his/her Aadhaar number.
Where this is taught
Free preparation for NISM Series VIRelated terms
- Depository participantThe SEBI-registered agent through whom an investor reaches a depository — NSDL and CDSL cannot open investor accounts themselves, so every demat account is opened and operated through a DP.
- Client Master ReportThe depository-system report of a demat account's recorded details - holders, address, bank, contact and other static data - sent to the client on account opening and used as proof of account details.