Transferring Bank refers to a bank that, in a transferable L/C (Transferable Letter of Credit) transaction, transfers part or all of the amount under the L/C to a second beneficiary (transferee) upon the application of the first beneficiary (original beneficiary). Usually, the transferring bank is the advising bank of the L/C, but it may also be a bank designated by the issuing bank. Use scenario: When an intermediary, as the first beneficiary, needs to transfer the rights and interests under the L/C to the actual supplier (second beneficiary), the transferring bank handles the transfer procedures. Precautions: The transferring bank must explicitly agree to the scope of the transfer, and after the transfer, the terms of the L/C must not be changed without authorization (except that the amount, unit price, validity period, presentation period, etc. may be reduced or shortened); the transferring bank does not assume independent payment liability for the documents presented by the second beneficiary and is only responsible for forwarding the documents to the issuing bank. Difference from the advising bank: The advising bank is only responsible for advising the L/C, while the transferring bank must actually handle the transfer and may re-draft the L/C. Difference from the negotiating bank: The negotiating bank purchases documents and advances funds, while the transferring bank does not advance funds and only provides transfer services.
📝 Examples
1. As an intermediary, after receiving the transferable L/C issued by Hong Kong, our company immediately applied to the transferring bank to transfer 70% of the L/C amount to the domestic factory, so that the factory could ship the goods and present the documents directly. (Note: The intermediary uses the transferring bank to partially transfer the L/C rights to the actual supplier.)
2. When handling the transfer, the transferring bank advanced the expiry date and the latest date for presentation of the original L/C by 10 days and 7 days respectively, so as to ensure that the first beneficiary has sufficient time to replace the invoice and draft. (Note: The transferring bank adjusts the L/C terms to protect the first beneficiary's right to substitute documents.)
💡 Foreign Trade Tips
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