Transferable letter of credit

Transferable letter of credit

Document that allows the first beneficiary on a standby bank assurance of funds to transfer all or part of the original letter of credit to a third party.

Transferable Letter of Credit

An irrevocable letter of credit with three parties. The first party is the bank issuing the letter of credit. The second party is an intermediary who accepts the letter of credit from the bank, and is called the first beneficiary. The third party is called the second beneficiary and is often an importer or exporter. Generally speaking, the first beneficiary is the second beneficiary's representative in the country in which the letter of credit is issued. In order for the letter of credit be transferable, the bank must be aware of the situation and agree to the transfer. This agreement allows the first beneficiary to transfer the letter of credit to the second beneficiary. A transferable letter of credit is relatively common for international transactions in the Far East.
Mentioned in ?
References in periodicals archive ?
I, in turn, issue a transferable letter of credit to our manufacturers in China.