transferable letter of credit (L/C)

Irrevocable L/C with two (and only two) successive beneficiaries. In this arrangement, the first beneficiary (an intermediary or importer's foreign representative) can assign part or whole of the L/C amount to a second beneficiary (the supplier or manufacturer). To be transferable, the L/C must be so marked by the issuing bank on the instructions of the buyer or importer (the account-party). On the instructions of the first beneficiary the advising bank can transfer it to the second beneficiary but not any further. Used extensively in the Far East (China, Japan, Korea, Singapore, Taiwan, among others). See also back to back letter of credit.