BACK TO BACK LC

A back to back lc is also called as countervailing credit. the beneficiary of an irrevocable export lc may have to purchase goods from another party to enable him to execute the export. he may require necessary finance to purchase the relative goods for that purpose he may approach his bank by exhibiting and lodging the said export lc to establish another import lc in favour of another party to import raw materials required to execute the export. such an import lc is known as back to back lc as it has the backing of export lc received in favour of the exporter. the payment of back to back lc is made only after the realization of proceeds of the export lc in full amount which is incorporated as an additional conditions in such back to back lc . these types of lc are quite popular in Nepalese garment exporters who requires to import fabrics from back to back import lc to execute their export order of ready made garments.