Law

What Is An LEI Number And What Is Its Relevance In Today’s Markets

The LEI stand for Legal Entity Identifier which is basically a code that is given to companies who have taken a loan of 4 crore or more from any nationalized or private bank in a country. This is probably one of the most important things these days as one can track the credit history of anorganization easily using the LEI Number. You may now ask as to why is this important and how can this particular thing help the people and companies right!! Well the answer is below.

Why this Number is so very important?

Say for example if you are going to tie up with a company who has a good global existence and a turnover of crores every year but then still you have some doubts about the history of the company. You can just ask them for their LEI Number and do a brief check online about their past history of transactions with the banks in terms of loans taken. Now the thing here is if at all you find that the history of the company in terms of the Loans taken and repayment period you can just ignore the deal if not you can easily Go ahead with the deal as the company that has a good banking history will definitely be a good one.

See when you are tying up with a company you become their partner in their debts as well as most of the contracts have this very clause attached with them. Apart from that if you sign a contract and later the company that you have partnered with becomes bankrupt you will be the one who will be asked to repay the whole amount. So better be careful and ask for the LEI details and once you are sure of the things just go ahead.

How is this thing helping the companies?

If you own a company and have taken a load on more than 4 crores and then if you want to tie up with some other company you can just give them your LEI Number details and then they can themselves check about your companies past banking history. There is a capping of an amount of 4 crore after which a bank will tell you to register with the LEI and at times a bank may also request you to get registered in case as per their banking policy.

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