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.