How to Open Back to Back L/C in Garment Export Business


This type of L/C is opened against the original master L/C. A back to back letter of credit is a new credit. It is different from the original credit based on which the bank undertakes the risk under the back to back credit. In this case the bank’s main security is the original credit. There are two types of Back to Back L/C, one is congruent and another is incongruent.

Fig: Line diagram of

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