Difference Between Transferable LC and Non-Transferable LC

Jenith Kumar

Transferable LC -

A transferable letter of credit is one, which specifically states that it is

transferable. This will only occur if the applicant for the letter of credit

(buyer) agrees. In a transferable letter of credit, the rights and

obligations of the beneficiary are transferred to another party, usually a

manufacturer or wholesaler (Second Beneficiary). Transfer may be either full or partial.

Non-Transferable LC -

A non-transferable letter of credit is exactly the opposite of a Transferable

Letter of Credit. In a Non-Transferable Letter of Credit, the bank refuses to

allow the transfer of credit to any other beneficiary other than the first beneficiary.

Thus, it cannot be transferred to any party, and only the exporter/mediators/first

beneficiary can claim the credit for it.

Search