a transferable lc it the one that can be transferred partially or fully by the original beneficiary ( known as first beneficiary ) to one or multiple other parties ( known as second beneficiary ). it is normally used when the first beneficiary does not supply the merchandise himself, but is a middle man and thus wishes to transfer part or all of his rights and obligations to the actual supplier as secondary beneficiary. a transferrable credit is also used when the first beneficiary is not able to export the entire order, thus transfers rest to others. but passing on of the credit to the third beneficiary by the second beneficiary is prohibited. a credit is transferable only when a credit specifically states as transferable.
Any standard lc having special payment conditions that, the negotiating bank is authorized to claim and get the payment against the lc directly from the opening bank's nominated agency bank after presentation of credit confirmed documents is known as reimbursement LC or direct reimbursement Lc. In most of the cases payment of the import, thus is already effected prior to receipt of the documents and consignment by the importer.