back to back letter of credit (L/C)

Definition

Arrangement in which one irrevocable letter of credit serves as the collateral for another; the advising bank of the first letter of credit becomes the issuing bank of the second letter of credit.

In contrast to a transferable letter of credit, permission of the ultimate buyer (the applicant or account party of the first letter of credit) or that of the issuing bank, is not required in a back-to-back letter of credit. It is used mainly by intermediaries to hide the identity of the actual supplier or manufacturer. Also called counter credit or reciprocal letter of credit.

单词	back to back letter of credit (L/C)
释义	back to back letter of credit (L/C) Definition Arrangement in which one irrevocable letter of credit serves as the collateral for another; the advising bank of the first letter of credit becomes the issuing bank of the second letter of credit. In contrast to a transferable letter of credit, permission of the ultimate buyer (the applicant or account party of the first letter of credit) or that of the issuing bank, is not required in a back-to-back letter of credit. It is used mainly by intermediaries to hide the identity of the actual supplier or manufacturer. Also called counter credit or reciprocal letter of credit.
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